Unemployment Down and Prices Must Go Up

The Nero News Service, "As the World Burns"

The Labor Department reported this week that the January unemployment rate hit an unexpected low - 4.7%. But, at the same time, the number of new jobs created dropped off. The economy added 1.98 million jobs during all of 2005, down from the 2.1 million generated in 2004, according to annual revisions by the Labor Department released Friday (borrowed from the LA Times).

So, unemployment down, but so are new jobs. What's up?

Well, the number of people who the government says have dropped out of the labor force is up. Dropped out of the labor force??? Are you wondering what that means? Think of it this way. You have a wonderful job, flipping burgers or breaking your back and knees at a construction site, or maybe you make widgets in a plant that hasn't been moved to China or India yet, and then, the bosses lay you off. You look for work, but you can't find it. You look, for months, and months, maybe for more than a year. You can't find it. Finally, someone decides that you must not really want a job, so they say that since you have not found one you are so discouraged that you have decided to live without one, and so, YOU have dropped out of the labor force. (Halelujah, I'm a bum. Halelujah, bum again....)

Also up, the inflation rate. The 3.3% annualized wage gain for 2005 lags behind the 3.4% yearly inflation rate (also borrowed from the LA Times). So, workers wages aren't keeping up with increases in the cost of living - a pattern that has been going on pretty consistently since the late 1970s.

Also up, Mr. Greenspan and the Feds (turns out that Greenspan was a jazz musician in his youth, so a name like a band is on the mark) decided that as a fond farewell to Mr. Greenspan, they would raise interest rates yet another time. They were thinking that all those employed workers were going to make the labor market tight, which would put pressure on employers to increase wages, and that would increase inflation.

So, what's up - well, we're getting screwed, still. More jobs but fewer jobs, More work but less pay, AND, just to make sure that your boss doesn't have to give in when you ask for a raise, the Feds have made borrowing money more expensive, so your boss will say that its too hard to get hold of money right now, sorry.

And, frosting for this cake, the recent Bush Administration budget request for the war in Iraq (not including Afghanistan) will put the Federal tab for the war at $440 billion.

But, it is true, the economy is stonger. Another Mission Accomplished.