Last night - Sarah Palin argued:
John McCain saying our economy was strong, he was talking to and about the American workforce, and the American workforce is the greatest in this world, with the ingenuity and the work ethic that is just entrenched in our workforce, that is a positive, that is encouragement, and that is what John McCain meant.
BLS reported this morning:
Nonfarm payroll employment declined by 159,000 in September, and the unemployment rate held at 6.1 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and retail trade, while mining and health care continued to add jobs.
No one doubts the work ethnic of Americans. The problem is that the economy is not generating sufficient aggregate demand to fully utilize this work ethnic.
Payroll employment has declined by 760 thousand since December 2007. While the unemployment rate did not further increase last month, that’s not because of any good news from the household survey of employment which showed a 222 thousand decline last month alone. We should note that the employment-population ratio fell from 62.1% to 62.0% but that was accompanied by a decline in the labor force participation rate from 66.1% to 66.0%. Palin does not seem to be attributing this decline to less work ethic and she’s likely correct as this decline is more likely due to a discouraged worker effect.
Our graph shows both the employment-population ratio (EP) and the labor force participation rate (LF) from October 1998 to September 2008. From early 2001 to September, the employment-population ratio fell from its 64% plus level to only 62.0% as of September 2003 but then partially recovered to 63.4% by December 2006. Since then, this ratio has plummeted with the September 2008 level being as bad as the September 2003 level. While the rise in the unemployment rate sounds bad, the drop in the employment-population ratio has been worse since the labor force participation rate has also declined from around 67% as of the end of 2000 to only 66% now.
The next Administration needs to recognize that these hard working Americans want new job opportunities. Alas, I did not hear very much from Governor Palin last night as to how a McCain Administration would go about accomplishing this goal.
Update: John McCain has responded to the labor market news and proposes that we cut government spending as a means for increasing employment. Lord Keynes must be rolling over in his grave!