Despite Lousy Fundamentals, Obama Touts Economy

By Joe Guzzardi
February 10, 2016
 
On Friday, the same day that the Bureau of Labor Statistics announced that in January the economy created only 151,000 new private sector jobs, President Obama touted the continued decline of the official but manipulated unemployment rate to an eight-year low 4.9 percent. A jubilant Obama said that the economy is “finally starting to translate into bigger paychecks,” and that the U.S. has the strongest, most durable economy in the world.”
 
He ignored that 105,000 or two-thirds of those 151,000 jobs were in low-paying sectors like retail (58,000), restaurant servers, and bartenders (47,000). And those “bigger paychecks” are a figment of Obama’s imagination. According to the BLS, in 2014 the average median salary for retail was $10.42 per hour or $21,670 per year, for waiters and waitresses, $10.40/$21,640.
 
Other inconvenient truths that the President overlooked were the 62.7 percent labor participation rate that has been at or near record level lows throughout his administration, and the downward adjustments to December job growth from the Wall Street-Journal touted as 292,000 to 262,000. Over the year wages rose 2.5 percent, still anemic.
 
Heightening the average Americans’ concern that, despite Obama’s enthusiasm, the economy is going south is that jobless benefits claims increased last week, and a Challenger Gray & Christmas’ report that employers cut 75,114 job cuts last month, a 218 percent increase from December’s 15-year low of 23,622. Wal-Mart and Macy’s announced that they may pare their work forces in anticipation of a shift away from retail and toward more Internet sales. More bad news from January: the Commerce Department announced that GDP growth had slowed to 0.7 percent in the fourth quarter of 2015.
 
The 105,000 that landed low-paying jobs in January is an interesting figure because it represents the average number of legal immigrants that enter the U.S. each month, and that will continue to come for years into the future, given current federal immigration policy. Many of those work-authorized immigrants will eventually compete with Americans for retailing and service industry jobs. And with the U.S. experiencing a renewed illegal alien border surge, more than 100,000 families since January 2014, adding more potential workers to the labor pool.
 
Using data taken from the BLS’s Native-Born series, economists found that since the start of the Second Great Depression through June 2015, the U.S. added 2.3 million foreign-born workers versus just 727,000 native-born. Nearly three-times as many jobs since 2007 have gone to foreign-born workers, legal and illegal immigrants, a fact that can be verified on the Census Bureau’s Current Population Survey, and that is a major contributor to wage stagnation. According to Economics 101, and the laws of supply and demand, the more laborers available, the worse off they all are because of the downward pressures thus exerted on wages.
 
During the coming years, workers’ economic conditions will worsen. BLS predicts that by 2018, 400,000 food preparation jobs will be created (average pay: $16,400) while only 11,100 financial analyst jobs will open up (at $70,930). And, if current trends continue, most of those jobs will go to foreign-born.
 
The federal government could take relatively easy-to-implement steps to protect American workers. First among them would be to make immigration policy subject to labor market conditions instead of running on autopilot, adding about one million foreign workers each year. Not far behind should be mandatory E-Verify that would ensure that only legally authorized workers hold U.S. jobs.