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« Trivia Tidbit of the Day: Part 934 -- Laboratories Of Democracy. | WILLisms.com | Video Infographic: Higher Education Reform. »

Trivia Tidbit of the Day: Part 935 -- Workforce Participation (Or, The Lack Thereof) Masking Real Unemployment.

States Can Decide What Works For Themselves-

Jim Pethokoukis tweeted out a number about the American economy this morning that was particularly startling:


"11.4%: The unemployment rate if labor force was as big as it was when Obama took office in 2009"

Texanomics has looked at this phenomenon and noted that Texas' labor force has grown by leaps and bounds, while the U.S. labor force has shrunk (I sometimes modify their graphs a bit, so go check out the originals over there at Texanomics):


So, those droves of people moving to Texas: they're coming here looking for work. Not all are finding it right away, of course, which drives up the Texas unemployment rate, but Texas has created more new private sector jobs than all other 49 states over the past decade.

Last month, Texanomics also looked at what unemployment rates would be like in various states, including Texas, if labor forces had held steady at the "recovery" point of June 2009:


It's a little hard to read, shrunk-down like this, so go check out the original post. More explanation:

Texas' fast growing labor force is increasingly comprised of people fleeing other states to search for new opportunities in Texas. Indeed, the Texas labor force has continued to steadily grow even as more than 750,000 Americans have dropped out of the labor force since the beginning of 2009.

And so while the US unemployment rate has dropped half a percentage point over the past year, that is attributable almost entirely to people dropping out of the labor force, not robust job growth. Meanwhile, in Texas, the employment growth has been strong, but the unemployment rate masks that because there is actually a growing labor force.

The above chart takes one approach at adjusting April 2011 unemployment rates for the labor force changes in the five largest states and the United States as a whole. Basically, we took April 2011 employment and divided it by the June 2009 labor force in each state, since June 2009 is referred to by many as the start of the "recovery".

So, if labor forces had held steady since June of 2009, Texas' unemployment rate would be much lower and America's would be much higher.

While the Obamanomics has killed millions of jobs and generally put America in a deep, deep rut, with no sign of it getting better anytime soon, Texas has remained resilient. From May 2006 to May 2011, Texas added more jobs than all other states combined:


And Texas, under Governor Rick Perry's time in office, has also created more new private sector jobs, in net terms, than all other states combined:

click for a bigger version

It's no wonder, then, that people are asking whether Obama would stand a chance against Rick Perry, should he ultimately decide to run for President.

The real question, then, becomes how much worse would Obama's economy look without Texas? And how much better could Texas be doing without Obama?

For the number crunchers out there, I may or may not get around to this soon, but wouldn't it be interesting to figure the current Obama unemployment rate, minus Texas, based on workforce levels when Barack Obama came into office?

Yes, the national unemployment rate is officially 9.2%, but it is really so much worse:


The average unemployed worker has been without work for 39.7 weeks (nine months)—the longest since the government began keeping track in 1948.

Even with strong economic growth, it will take time for unemployment to return to normal levels. If employers add an average of 260,000 net jobs per month—the rate the payroll survey showed during the late 1990s tech bubble—then unemployment will not return to its natural rate until August 2014.

If employers add 216,000 net new jobs per month—the rate the household survey showed in 1997, the year of the greatest job growth in the tech bubble—unemployment will return to its natural rate in October 2015.

We're fortunate people aren't wielding torches and pitchforks with these kinds of soul-numbing numbers. This is depressing data for America, and, based on my grocery and restaurant bills of late, inflation is here after, really, decades of being tamed. Indeed, the misery index is on the rise:


These misery index figures, in the twelves, are at levels not seen since Reagan took over from Jimmy Carter.

Obama will be a one-term President.


Previous Trivia Tidbit: Texas Winning Among Laboratories Of Democracy.

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Posted by Will Franklin · 8 July 2011 11:30 AM


You should footnote that the formula for calculating cost-of-living has been revised 26 times since 1978. For comparison purposes, if we were still using the CPI calculation from the Carter era, which included energy and groceries, our current annualized inflation rate would be in excess of 12%, yielding a current Misery Index of over 21%. We're definitely in a 'Carter-World' now.

Posted by: David/California at July 8, 2011 02:47 PM

Thanks for that tidbit. I actually was just looking into the "real" inflation rate, but I am not enough of an expert to say with resolve that it's actually higher than the official inflation rate.

Posted by: Will Franklin at July 8, 2011 02:48 PM

Dave's right. The CPI books are so thoroughly cooked as to be useless. Remember that it assumes you buy a new house every month, amortized, of course, and the price of housing has been in a dive for the last 2 years. This drags down the rest of the index. Food and energy have been left off for some time so that you hear the newsman on the radio chirping that "excluding the volatile food and energy sectors, the CPI showed an increase of (some very small number, about .2-.5%)". Now multiply the small number by 12 to get the inflation rate, and be glad the "volatile" sectors of food, home heating, electricity, and gasoline were left out lest the number get too high.

Posted by: Billll at July 8, 2011 11:16 PM

Love the analysis here. Even the financial experts are starting to sound like a pet store full of talking birds and it's clear that the MSM doesn't want shine any sort of spotlight on the Texas economy because it provides a stark contrast and forces the issues into a different paradigm then the editorial spin they've been selling.

Posted by: James at July 10, 2011 08:06 AM

This piece of info is very useful for me, thank you!

Posted by: Sharon Watch at July 18, 2011 04:09 PM