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St. Louis Post-Dispatch

Lee Enterprises

Sunday, October 11, 2009 10:32 PM CDT
LETTER: It is tough to lower the unemployment rate

By HAROLD D. NORDIN, Charleston

It is never made clear why the problem of high unemployment is difficult to solve. Our population is growing by 3 million-plus people per year and our labor force is increasing by one million-plus persons each year.

In 1932 the labor force was about 50 million and the unemployment rate (u-rate) was 25 percent, resulting in 12.5 million people unemployed.

By 1982, the labor force had increased to 100 million and the u-rate 12 percent, making 12 million persons unemployed. Currently, there are about 130 million persons in the labor force with 10 percent unemployment resulting in about 13 million people unemployed.

It is estimated the economy has to grow by about 2 percent per year just to employ the new entrants into the system (growth in population). So, if the economy grows by 2 percent per year, the u-rate will stay the same. To bring the u-rate down our economy has to grow more than 2 percent.

It is estimated that our economy has to grow by one and one-half to 2 percent per year above 2 percent growth to lower the u-rate by only 1 percent. So, at a sustained rate of 4 percent growth, it would take six years to bring the system back to full employment (about 4 percent natural unemployment) from our current rate of 10 percent unemployment.

In other words, even if our economy grew at a robust rate of 6 percent, it would still take three more years for us to achieve full employment.

There are two things that have to be remembered: first, our historical long-range economic growth rate is 3.1 percent, so we would have to be growing by more that our historical average to lower unemployment; and two, to grow by 4 to 6 percent would require that everything in the economic system was working perfectly.

For our economic system to grow requires that we produce and purchase more consumer goods and services (food, clothing, autos, etc.); investment goods (new buildings, equipment, houses); government spending expands (roads, schools, military) and that our exports increase greater than our imports.

We can’t force people to buy more, or businesses to invest more, or foreign consumers to purchase more of our goods. In addition, during hard times fewer taxes are collected resulting in even state and local governments cutting spending and employment.

The problem of growing our economy to lower the unemployment rate is indeed a difficult one to solve.

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Harry Potter wrote on Oct 12, 2009 8:28 AM:

" Excellent points, Mr Nordin. But it's easier for some to mock the efforts of our president. This is especially true for those who don't have a clue when it comes to simple economics, and simply view this issue through the political views of their party, and rely on talking points for their arguments. This current problem did not happen overnight, and I don't think it's realistic to expect it to be corrected in just a few months. Consumer confidence is down, and that adds to the problem. Locally, we see that manifesting itself in the number of small businesses that have either closed down or are cutting back on their number of employees. The extreme polarization of our two political parties, both at the state and national level is not helping either. "

The Question wrote on Oct 12, 2009 9:04 AM:

" Dr. Nordin is an economist, so naturally his opinion will carry no weight with the know-nothing GOP crowd, who trust the judgment only of dropouts like Sean Hannity, Glenn Beck and Rush Limbaugh. "

father bob wrote on Oct 12, 2009 2:10 PM:

" The Question wrote on Oct 12, 2009 9:04 AM:
" Dr. Nordin is an economist, so naturally his opinion will carry no weight with the know-nothing GOP crowd, who trust the judgment only of dropouts like Sean Hannity, Glenn Beck and Rush Limbaugh. """""

you mean the drug addled dropouts enamored with another quitter from alaska? the dropouts who have 3 years of college between them? the dropouts so many americans can relate to because they themselves are also losers? the dropouts who rant, scream and have near emotional breakdowns just for the sake of entertainment television???....those three ignorant dropouts??? "

cedric66 wrote on Oct 12, 2009 2:51 PM:

" It seems to me that for somebody that has no education and are labeled as dropouts by the far left loonies, I believe all of these dropouts as you call them have done pretty well for themselves FB. How about Bongo and "Wookie"? How do we know that they even made it out of the 8th grade. You shouldn't say things like that when your party is worse. Show me their diplomas! You and your buddies better get ready because the GOP is gonna bust your bubble in 2010!!!! Now go whine some more!!!!!! LMAO at your stupid remarks. "

cedric66 wrote on Oct 12, 2009 2:54 PM:

" I believe that Bongo even admitted to smoking pot and snorting cocaine FB!! What does that make him? "

The Question wrote on Oct 12, 2009 3:29 PM:

" you mean the drug addled dropouts enamored with another quitter from alaska? the dropouts who have 3 years of college between them? the dropouts so many americans can relate to because they themselves are also losers? the dropouts who rant, scream and have near emotional breakdowns just for the sake of entertainment television???....those three ignorant dropouts???
----
Why yes, FB. Those are the very ones I mean. "

Harry Potter wrote on Oct 12, 2009 4:51 PM:

" I am demanding that Obama show us his law diploma from Harvard. I have a call into Orly Taitz and we will be filing a class action suite against him if he doesn't cough it up. We know his diploma really comes from a community college in Kenya, and Orly has a copy of it.

We also demand to see the papers on his dog. He claims it's a pure breed, but were not buying it. "

Harry Potter wrote on Oct 12, 2009 4:57 PM:

" Now come on. You guys know that Beck, Limpo and their ilk know more about economic issues than any PhD trained economist. Their getting rich by pandering to a bunch of sore head losers with their hate rants proves that. "

father bob wrote on Oct 12, 2009 5:08 PM:

" cedric66 wrote on Oct 12, 2009 2:51 PM:
"FB. How about Bongo and "Wookie"? How do we know that they even made it out of the 8th grade. You shouldn't say things like that when your party is worse. Show me their diplomas!"""""

the mouse doth roar!!..... "

Lost Confidence wrote on Oct 12, 2009 5:54 PM:

" I know Hal. While he is a very intelligent man, he is also a very left of center individual, politically. While I do not discredit his analysis, I don't take it as gospel. There are plenty of other PhD's that both agree and disagree. "

cedric66 wrote on Oct 12, 2009 6:16 PM:

" Just as I thought!! You loonies are the true bred phoney's "

GrampaC wrote on Oct 13, 2009 6:40 AM:

" Wow. News release: Obama wins the Heisman Trophy because he watched a football game! I'm surprised we're not blaming Reagonomics here! Guess the Obama gang miscalculated the unemployment rate again.
Undeniable truth of life from El Rushbo:
"There will always be rich people, and there will always be poor people."
Take that to the bank. Oops! Taxes went up for the rich!
Michael Moore's great documentary: Capitalism: A love affair, states that capitalism never did anything for Mr. Moore. Wonder how his documentary would fare in Communist China? He'd need the OJ Dream team to get him out of jail! "

father bob wrote on Oct 13, 2009 9:35 AM:

" GrampaC wrote on Oct 13, 2009 6:40 AM:
"Wonder how his documentary would fare in Communist China? He'd need the OJ Dream team to get him out of jail! """"""

it's called freedom of speech....the reason you get to blow off all your hot air here on this blog. "

even steven wrote on Oct 13, 2009 9:50 AM:

" While this is an interesting letter raising some good points, I think Mr. Nordin has overlooked the energy sector's impact on overall economic growth. The easiest way out of the current recession is to reduce the barriers to drilling off our shores, building nuclear plants, refineries, and coal gasification plants similar to Futuregen. The ancillary jobs created would put hundreds of thousands to work in very short order. Also, it would send the US on the path toward energy independence and thus stop the largest transfer of wealth in history (the US to oil producing nations). The government could help by stepping out of the way and by providing incentives to companies to build large energy projects. Couple that with a general tax cut and reduced government spending, and our economy would be sizzling. "

JWT wrote on Oct 13, 2009 6:17 PM:

" Would it help if Apple manufactured IPODs in America instead of China? "

XTownie wrote on Oct 14, 2009 1:38 AM:

" JWT wrote on Oct 13, 2009 6:17 PM:
" Would it help if Apple manufactured IPODs in America instead of China? "

Ummm, yeah! But then they'd also have to pay healthcare benefits and we can't have that!!!

One of the problems with economists' analysis is not factoring the differences between countries while seemingly calculating on a "global economy" basis. No, "we can't force people to buy more", but we can find a way to factor in how it is that the Money People (Wall Street) are seeing profits while the majority of us (Main Street) are having to struggle while laying people off. "

cedric66 wrote on Oct 14, 2009 5:57 PM:

" Model Citizens Line Up for Money from Obama's "Stash"

--------------------------------------------------------------------------------

This is enough to make me ill... Obama Money my fat butt. Do these ignorant parasites actually think Obummer is giving out his money? The same Obummer that has given so much to charity?
Or the Loving brother that has supported George Obama living in a shack in Kenya.
Or with all the money he has spent on his grandmother fixing up her mud hut.
The only Obama money I could see would be a $3 dollar bill. LMAO
__________________ "

JWT wrote on Oct 15, 2009 8:55 AM:

" The people at the top who make more than they'll ever spend are the problem.
How many hundreds of millions did Steve Jobs earn last year?
How many American familys could he support with those millions?

For the record I'm a huge Father Bob fan! "

father bob wrote on Oct 15, 2009 11:05 AM:

" JWT wrote on Oct 15, 2009 8:55 AM:
"For the record I'm a huge Father Bob fan! """"""

DUCK!!!! "

shumphreys wrote on Oct 15, 2009 2:20 PM:

" The main issue that I think Mr. Nordin is pointing out that everyone is ignoring is the pure raw issue of NUMBERS. Expanding sustainable energy jobs won't address the numbers issues. POPULATION numbers. The Numbers of those in a given population that are in the job market, entering the job market, wanting to be in the job market but can't. AND he is only talking about our country. He didn't mention the NUMBERS of folks in developing countries looking and needing and wanting jobs. "

Harry Potter wrote on Oct 15, 2009 4:50 PM:

" For the record I'm a huge Father Bob fan! "

I am too, JWT, he makes some excellent points, and isn't it refreshing to see another poster get some kudos and not have to resort to making up phony names to pat himself on the back like one poster regularly does? "

Stanley Stetson wrote on Oct 15, 2009 7:40 PM:

" Harry Potter wrote on Oct 15, 2009 4:50 PM:
" isn't it refreshing to see another poster get some kudos and not have to resort to making up phony names to pat himself on the back like one poster regularly does? "

* why yes it is dohbaugh * your love is divine * "

Harry Potter wrote on Oct 16, 2009 12:27 PM:

" The main issue that I think Mr. Nordin is pointing out that everyone is ignoring is the pure raw issue of NUMBERS.

That's right, Susan. Unfortunately I think the gist of this letter went over the head of some who would rather blame Obama, who actually inherited the mess. Instead of blaming the man trying to clean up the mess, I would think they might actually look at who it was that created it. "

Raptor wrote on Oct 16, 2009 6:39 PM:

" I didn't get the impression that Hal was implying anything about politics.

However the discussion sure digressed quickly into an us and them.

Several points which I would like to see addressed is how the unemployment rate is actually calculated.

Isn't there the government measure and the real measure?

It is my understanding that real unemployment is in the high teen's.

Does anybody have data on that?

It is so much more productive to discuss problem solving than chatter about pettiness. Although I certainly hope that those who chatter "feel" better about themselves. "

shumphreys wrote on Oct 17, 2009 8:30 AM:

" Raptor I may be wrong but from what I understand the Governments reported unemployment rate is based on those receiving unemployment benefits. That leaves out those whose benefits have expired, those who are partly employed but don't have enough work to make ends meet and would like more work (some businesses in order to avoid mass layoffs cut peoples hours back across the board)and those who just never applied for benefits either because they hadn't worked in one place long enough to acquire benefits or had only been working at several part time jobs that didn't pay benefits. "

Bps wrote on Oct 17, 2009 12:33 PM:

" Sorry if this is a duplicate, but the site burped the first time I posted this and I don't think it posted:

-------------
Raptor wrote on Oct 16, 2009 6:39 PM:
" I didn't get the impression that Hal was implying anything about politics.

However the discussion sure digressed quickly into an us and them.

Several points which I would like to see addressed is how the unemployment rate is actually calculated.

Isn't there the government measure and the real measure?

It is my understanding that real unemployment is in the high teen's.

Does anybody have data on that?

It is so much more productive to discuss problem solving than chatter about pettiness. Although I certainly hope that those who chatter "feel" better about themselves. "
---------

In answer to your questions:

The gooberment has changed the way they calculate the unemployment rates several times during several different administrations.

The basic unemployment rate and how it is calculated can be found at:

http://www.bls.gov/cps/cps_htgm.htm

As you might imagine the rates can be very politically charged and most politicians try to twist their meaning to their best benefit.

They are often adjusted after the fact to a more accurate level but these are seldom mentioned by the Mass Media and during increasing unemployment are often purposely down played by the party in power.

The rate you most often see used is the U3.

The U-3 represents the total unemployed, as a percent of the civilian labor force and is called the official unemployment rate.

Frankly it usually woefully under represents the actual unemployment.

For September 2009 U-3 stands at 9.8% nationwide

The rate that closest represents the actual unemployment situation is the U-6.

The U-6 Total unemployed includes all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

For September 2009 U-6 stands at 17.0% nationwide and

Here is a link to the current twelve months rolling comparison data.

http://www.bls.gov/news.release/empsit.t12.htm

Another site that is worth a visit is http://www.shadowstats.com/alternate_data

You have ""pay to play"" to see the detail information, but their opening page has some very interesting statistics on employment, CPI, the M-3 and others that are worth watching.

It currently shows unemployment at almost 22% nationwide.

Want to visually see the impact of the last business cycle and employment:
http://tipstrategies.com/archive/geography-of-jobs/

Hope this helps answer your questions. "

red,white,blue wrote on Oct 17, 2009 9:01 PM:

" It always amazes me the posts that the jg chooses to print. The one by JWT for example. WHY? And there's always a lot of TQ and HP but then when you post 20 times a day maybe they're going by quantity not quality? "

Harry Potter wrote on Oct 18, 2009 11:46 AM:

" " It always amazes me the posts that the jg chooses to print. The one by JWT for example. WHY? And there's always a lot of TQ and HP but then when you post 20 times a day maybe they're going by quantity not quality? "

A little green showing through Reddy?

I'll tell you the same thing I told the resident whiner and ankle biter, Neo, perhaps when you actually post something that's not just a whine about how bad the Dems and the president are, they might put one of your comment in too. Try getting postive once in a while. The glass doesn't have to be half empty all the time. "