Fausta's Blog

Record 89,304,000 Americans ‘Not in Labor Force’ — 296,000 Fewer Employed Since January

The Bureau of Labor Statistics (BLS) labels people who are unemployed and no longer looking for work as “not in the labor force,” including people who have retired on schedule, taken early retirement, or simply given up looking for work.
The increase marks the second month in a row, after rising in January from 88.8 million in December. Those not in the labor force had declined in December from 88.9 million in November.

The number of Americans not in the labor force increased by 296,000 between January and February, which means that the labor force participation rate, which measures workers and those looking for jobs, also fell, to a 32-year low of 63.5 percent.

Mr. Bingley has more.

This is what teen unemployment has been for the last six years:

With that dismal number, the President proposes a 25% increase in minimum salary to $9/hr. The result? The least educated, experienced and skilled will be priced out of the market.

In today’s WSJ:
The Minority Youth Unemployment Act
A higher minimum wage will hurt Obama’s most loyal supporters.

The damage from a minimum wage hike depends on the overall labor market. If the job market is buoyant, as it is in the fracking boomtown of Williston, N.D., fast-food workers may already make more than $9 an hour. But when the jobless rate is high, as it still is in California and New York, the increase punishes minority youth in particular.

That is what happened during the last series of wage hikes to $7.25 from $5.15 that started in July 2007 as the economy was headed toward recession. The last increase hit in July 2009 just after the recession ended, and as the nearby chart shows, the jobless rate jumped for teens and black teens especially. For black teens, the rate has remained close to 40% and was still 37.8% in January.

A study by economists William Even of Miami University and David Macpherson of Trinity University concludes that in the 21 states where the full 40% wage increase took effect, “the consequences of the minimum wage for black young adults without a diploma were actually worse than the consequences of the Great Recession.”

William Dunkelberg, chief economist for the National Federation of Independent Business, says that after the July 2009 increase 600,000 teen jobs disappeared in the next six months even as GDP expanded. In the previous six months, when the economy was still shrinking, half as many teen jobs were lost. The overall teen jobless rate was still 23.4% last month, which means demand for unskilled workers is low even at $7.25 an hour. Demand will be lower at $9.

As for that family Obama referred to,

But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.

Wrong, indeed,

He left out that most minimum-wage earners are not the primary bread winner. Nearly 40% live with a parent or relative. The average family income of a household with a minimum-wage worker is about $47,023—which is far above the poverty line of $23,550 for a family of four.

Mr. Obama didn’t even tell the whole story about parents raising a family on a minimum-wage income. A full-time minimum-wage worker earns roughly $15,000 a year. But that worker also receives a cash supplement from the earned income tax credit of roughly $5,000, and many states provide benefits on top of that to reward working. That doesn’t count government benefits like food stamps, Medicaid, child care and more. According to data from the Employment Policies Institute, about two of every three minimum-wage workers also get a raise within one year.

There’s also the erroneous premise that people are forever stuck at minimum wage, when, in fact, minimum wage jobs are entry-level jobs where workers gain the experience they need to advance. More on that in the video:

If you listen to the POTUS, you’d be thinking that because he’ll just keep raising taxes.

However, if you look at the Congressional Budget Office (CBO), the situation’s different:
CBO: Tax Increase Fails to Solve Spending and Debt Crisis

• With economic growth and President Obama’s two tax increases, the $1 trillion tax hike in Obamacare, and the $618 billion fiscal cliff increase, revenues will surge to 19.1 percent of gross domestic product (GDP) in 2015, and will remain well above the historical average of 18.5 percent for the rest of the decade. These figures offer conclusive proof that—notwithstanding the assertions of the President and Senate Democrats—there is plenty of revenue flowing into Washington.
• Yet even all this new revenue fails to solve the government’s fiscal problems. Starting at $845 billion this year, deficits shrink somewhat through 2016, but then start rising again, returning to near the trillion-dollar range by 2023. The pattern proves that higher taxes cannot solve the deficit problem—only spending restraint can.

Read the whole thing.

Three items on Latin America today highlight the importance of free markets and development:

Monica Showalter at IBD explains how the Pemex Explosion Should Push Mexico To Privatize

The Baker Institute’s 2007 “Empirical Evidence of the Operational Efficiency Of National Oil Companies” study impartially demonstrated that private companies operate better than public enterprises.
The objectively calculated study of more than 80 companies concluded that relative to economically efficient producers, a national oil company is likely to under-invest, over-employ, sell oil products at subsidized prices, and shift extraction of resources from the future to the present.
“Technical inefficiencies,” the paper concluded, “are largely the result of governments exercising control over the distribution of rents.”

In Argentina, the government announced a two-month price freeze on supermarket products Monday in an effort to break spiraling inflation; not content with screwing up the beef imports, now they’re intervening in all groceries:

The government announced the price freeze on the first business day after the International Monetary Fund formally censured Argentina for putting out inaccurate economic data. The IMF has given Argentina until September to bring its statistics up to international standards, or face expulsion from the world body in November.

Cristina Fernandez may end up using the military to hand out meat in the stores, as they are doing in Hugo Chavez’s Venezuela.

When I was in Argentina the neighborhood supermarkets stocked only four kinds of vegetables, plus apples and oranges. Contrast that with what Mr. Bingley found in Brazil, where the government is staying away from regulating food prices,

Government intervention leads to shortages, inflation, and eventually to poverty.

Drudge has the juxtaposition,

Comes to show that when the Fed’s printing money like there’s no tomorrow, the stock market goes up.

And, while you’re at it, IRS: Cheapest Obamacare Plan Will Be $20,000 Per Family
UPDATE:
ObamaCare’s $20,000 Per Family Ticket Price will Wreck the Private Insurance Industry

That figure represents almost half the US median income in 2011, of $50,054. And median income is trending downward, as the laughably dishonestly named Affordable Care Act aka ObamaCare pushes prices up to $20,000 per year.

It’s not difficult to envision how this will play out. The upward pressure of insurance costs — some families can expect 85% increases — and the downward pressure of income will drive many Americans out of insurance altogether. Whey they need care, they can face a fine as high as $2,400. So many will opt out of insurance, knowing that they cannot be denied coverage for any pre-existing conditions under ObamaCare. They’ll pay the fine and get insurance if they have to, otherwise they will end up having their health care picked up by the government.

Before long, government will be the only payer, as private insurance companies go bankrupt.

It’s all part of the plan.

Rick Santelli is right, again:

“When you act like Europe, you get growth rates like Europe,” Santelli said. “Our discussions with economists sound like we’re in Europe. They’re always doing the right thing. They’re always thinking they know better, and this the kind of growth.”

“We have become Europe,” Santelli declared. “We are now Europe.”

Bestest recession ever!!!

Straight from that arm of the vast right-wing conspiracy,
US economy shrinks 0.1 pct., first time in 3 ½ years; deep cut in defense spending key factor

And it was unexpected!

Economists said the surprise decrease in the nation’s gross domestic product wasn’t as bad as it looked. The weakness was primarily the result of one-time factors. Government spending cuts and slower inventory growth subtracted a total of 2.6 percentage points from growth.

Looking good!

“Frankly, this is the best-looking contraction in U.S. GDP you’ll ever see,” Paul Ashworth, an economist at Capital Economics, said in a note to clients.

Be happy!

Steve Hanke has the graph:

Expect continued investment in Latin America.

It’s gray outdoors, the Angelenos are freaking out over cold weather,

and us taxpayers are paying for Bill Clinton’s Cinemax and Jimmy Carter’s Dish Network (neither of which this taxpayer indulges on).

Obama, “a pretty friendly guy“, gave a press conference that The Other McCain called a festival of lies. The message of the press conference was that a debate over the debt limit was already harming the economy and could push the U.S. into a recession, and Obama didn’t bother explain the position he took as senator.

Does that mean that Obama owns the debt now?

Nope.

No matter what the facts are – that Federal outlays exploded after 2009 -

two things are happening:

1. The notion of a POTUS held accountable for disastrous spending went out of fashion on Tuesday, January 20, 2009, and
2. ‘You Kids are So Damn Screwed’

But the Wall Street Journal indulges in wishful thinking,

The next time Mr. Obama holds a press conference, somebody should ask him to identify by name those who want to repeal Social Security, steal food from orphans and cancel science funding. We’d like to meet these Visigoths. Otherwise, if the fiscal negotiations are going nowhere, perhaps it is because the President simply won’t make an honest argument.

For now, the White House has informed House Budget Committee Chairman Paul Ryan (R-Wis.) that it will miss the legal deadline for sending a budget to Congress.

Do we have an imperial president?

In other news, Inauguration fund coming up $8 million short? Or is it $10 million?

But hey, if we get to pay for Bill’s Cinemax, we may get to pay for O’s inaugural! It’s the perfect time to wear black.

At OilPrice.com, James Stafford interviews James Kwak, associate professor at the University of Connecticut School of Law and blogs at The Baseline Scenario, which he co-founded with Simon Johnson

Oilprice.com: What are your thoughts on America’s oil and gas boom?

James Kwak: There are some obvious benefits. Lower dependence on politically unstable parts of the world is clearly good. Shifting electricity production from coal to natural gas is also good. One can also come up with a plausible scenario in which plentiful natural gas buys us the time necessary to shift toward greater usage of renewable energy sources.

On the downside, I worry about the political implications of the boom. Increased domestic production will encourage politicians to declare victory on the energy front without doing anything about the big, long-term problem: climate change. Before, fears of rising energy prices and dependence on the Middle East were encouraging political investment in renewables and conservation. Now the message from ExxonMobil and its allies will be that we don’t need to do anything because we are a (net) energy exporter and energy is cheap. That will further reduce the chances that we do anything meaningful about climate change.

Oilprice.com: What do you see happening to the US and global economies in 2013?

James Kwak: I’m modestly positive about the U.S., but that’s not because of any particular insight. It’s because I read Calculated Risk, and because the housing market is turning around.

Go read the whole thing.