Repeal the Social Security Earnings Penalty

Inside the Beltway, the world seemingly turned rosy last week. Establishment media outlets got all excited about the Labor Departments report that the unemployment rate dropped to 10% in November and that the month’s 11,000 seasonally adjusted jobs lost was the lowest such figure in almost two years.

But a closer look at the not seasonally adjusted job gain/loss numbers during the past three months -- that is, what has actually happened on the ground -- reveals that the “good news” is more than a little illusory:

BLS1109NotSeasAdjJobs

Comparing 2009’s monthly actuals to the average of 2003-2007, when the economy was doing well, you will see that after some improvement in October, the situation actually worsened in November:

  • September 2009’s 389,000 jobs actually added were over a quarter million shy of the 643,000 average added in September 2003-2007.
  • October 2009 showed significant improvement. The 708,000 jobs added that month were only 81,000 fewer than that month’s 2003-2007 average of 789,000.
  • But in November, virtually all of October’s improvement disappeared. November’s 80,000-job pickup was, as in September, over a quarter million jobs short of the November 2003-2007 average of 331,000.

November’s seasonally adjusted job loss of 11,000 was artificially influenced by how truly awful November 2008’s job loss was in the wake of Obama’s presidential victory. Because the past year or so has been so bad and because the seasonal adjustment calculations weigh more recent years more heavily, wild gyrations in the reported seasonally adjusted numbers may continue for a while. People who really want to understand what’s going on in the employment market are going to have to pay much more attention to the not seasonally adjusted numbers for the foreseeable future.

Beyond all that, Americans continue to withdraw from the workforce. Since June 2008, at about the time when what I have been calling the POR (Pelosi-Obama-Reid) economy began, after five years of barely budging, what the government calls “the labor force participation rate” has dropped from a seasonally adjusted 66.1% to November’s 65.0%. That may not seem like much, but as a result over 2.5 million fewer people are working or looking for work than if that rate had held steady. (These people are, by the way, not considered in the primary unemployment rate calculation.)