The unemployment rate fell in June and that is a good thing!

There are reasons for the decline some of those reasons are readily apparent and some of those reasons are below the surface of the data and need to be ferreted out. The political messaging and rhetoric from all sectors of the political spectrum continue to use the jobs report, the unemployment rate, the overall economic recovery and the underlying reasons for and problems with each of these areas as bludgeons to advance their political position and agenda for the upcoming elections more than as a basis for actually creating a pathway to economic expansion and a resurgence of the middle class in the United States.

The exact number varies, but looking at multiple sources seems to indicate that approximately 125,000 must be created on a monthly basis simply to accommodate the number of new entrants to the work force offset by the number of people exiting the work force at retirement age. This number is greatly influenced by the labor participation rate, which is a political club used by conservatives to beat liberals just as often as the liberals used the falling employment rate and the jobs created numbers as clubs to beat conservatives. Bearing that in mind as we look at the number of jobs created monthly since the beginning of the recovery in 2009, the task of recovery in the sense of replacing the jobs lost in the recession was a task of monumental proportions not seen since the depression.

It is estimated that 8.7 million jobs were lost in recession (2007 2009) and since the recovery began and as of June 2014 the economy has replaced those lost through job creation. However, the imbalance between the numbers of people entering the workforce, since the recovery began in June 2009 and those legitimately (planned) leaving the workforce coupled with the fact that many of the jobs lost were good-paying, upper-middleclass jobs while many of those created during the recovery have been entry-level, part-time, near lower paying positions. These are some of the reasons that Wall Street has recovered much faster than Main Street USA over the past five years and the reason that unless things change the recovery will continue to have minimal real benefit for the working class in the USA.

Of course the retirement of the baby boomers is a factor in the increasing numbers of people leaving the workforce and while the significance of that numbers is hyperbolized by liberals and understated by conservatives, in order to advance their own political agendas on employment, it is not the whole story of the shrinking labor participation rate. The historic lows of the labor participation rate, since the end of the recession in 2009, have been significantly influenced by the discouraged members of the workforce who have simply given up and additionally by those retiring earlier than they would have logically wanted to because of job loss. Automation, off-shoring of corporate operations, increased demand for imported goods, and expanding global manufacturing footprint and consolidation of businesses (and the resultant plant/operations closures) have all contributed to the historic lows in the labor participation rate and to long-term unemployment.

There is a clamor for an increase to the minimum and rightfully so, since in real dollars the minimum wage would need to be a little over $10 per hour to account for the inflation since the minimum wage was established. Contrary to what many think, simply raising the minimum wage to $10 or to $15 or to whatever, in and of itself will not solve income inequality, unemployment or any of the other economic challenges facing the country. Raising the minimum wage will not stimulate growth or encourage corporations to expand, return off-shored operations to the U.S. or to create high paying middle class jobs in a new manufacturing/production base in the U.S. and that (a phoenix like rising from the ashes of a strong middle class) is exactly what is required if the U.S. economy is to regain its position as the dominant economy of the world. That is not to say that the minimum wage should not be raised, it should and immediately to $10 with future increases tied to the CPI, but this is only a small step in the process of economic recovery and it would be an easy step if the professional politicians masquerading as public servants would simply think of their constituents well being instead of their own reelection.

(more later)