Unemployment: Why McCain talks about economic pain

posted at 11:10 am on August 1, 2008 by Ed Morrissey

The Bureau of Labor Statistics released their July numbers, and despite the mildly positive GDP growth announced yesterday, the rate rose again.  Unemployment has now risen to 5.7% as the economy lost 51,000 jobs.  The biggest jump in the rates came — again — from teen workers:

The unemployment rate rose to 5.7 percent, and nonfarm payroll employment continued to trend down in July (-51,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and several service-providing industries, while health care and mining continued to add jobs. Average hourly earnings rose by 6 cents, or 0.3 percent, over the month.

Both the number of unemployed persons (8.8 million) and the unemployment rate (5.7 percent) rose in July. Over the past 12 months, the number of unemployed persons has increased by 1.6 million, and the unemployment rate has risen by 1.0 percentage point.

Over the month, the unemployment rates for adult men (5.3 percent) and whites (5.1 percent) edged up while the rates for adult women (4.6 percent), blacks (9.7 percent), and Hispanics (7.4 percent) were little changed. The jobless rate for teenagers increased to 20.3 percent in July. The unemployment rate for Asians was 4.0 percent in July, not seasonally adjusted.

Unemployment among teens rose two full percentage points from June, and six full points from last year. The biggest change in that market, of course, came from the minimum-wage hike passed by Congress last year. The increase made labor more expensive at the same time that fuel prices started rising, putting two inflationary pressures on employers. Without recourse to even higher price increases for their product, they have had to curtail labor expenses instead.

Politically, these numbers require a great deal of care when addressing the economy.  Phil Gramm’s assessment of the economy was correct, but his words were poorly chosen.  With unemployment now rising for the seventh successive month, John McCain and his campaign need to take care how they address legitimate economic concerns without sounding dismissive, and at the same time point out that the sky isn’t falling.

It’s a tough balance to strike.  McCain does it best when he focuses on these legitimate concerns about the economy’s health and argues that incentivizing investment and lowering taxes will spur the growth that will provide long-term strength.  Jobs don’t get created by hiking capital-gains taxes or manipulating labor prices, as Congress proved yet again.  That’s the message McCain needs to deliver consistently.


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Jobs also don’t get produced by hare brained schemes like Obama’s idea to force the oil companies to give $1000 to American families.

I’m sure that will induce LOTS of investment in the American economy, if corporations find out if the make too much profit to suit an unaccomplished, unqualified, no-load jackass politician like Barack Obama, the “windfall profits”, will be confiscated.

They tried that in Russia and almost wrecked the country.

NoDonkey on August 1, 2008 at 11:14 AM

Bush 41 paid a high price for not acknowledging the pain of those suffering a mild recession in the Northeast during his reelection bid against Clinton and Perot. That, and the read my lips mistake.

Ordinary1 on August 1, 2008 at 11:17 AM

The “unemployment” rate is like the national debt. Both shouldn’t be zero. 5.7 overall, with lower numbers among adults is fine. Not too long ago, such a number would more or less be indicative of “full” employment. The “politics” of that terminology have changed. The more salient question is, where is the unemployment rate headed?

JiangxiDad on August 1, 2008 at 11:18 AM

Ed:

C’mon. The minimum wage is not the problem we face.

Yes the minimum wage hike affected matters in some regions, but it’s almost entirely irrelevant to the real crisis – the U.S. has collectively borrowed way too much money and spent it foolishly.

The hard part is that the gov’t doing nothing would be the best solution – this housing bill will be a huge boondoggle, and will do nothing to alleviate the nation’s pain – you may as well call it the bill Bush signed the Incumbent Re-Election Act of 2008.

McCain needs to address the real issues – housing prices are too high, and we are collectively borrowing too much money and the entire financial system of the nation is a shambles.

And trying to fix by gov’t fiat any of those things is exactly the wrong thing to do.

olddeadmeat on August 1, 2008 at 11:19 AM

Wow… a whopping 5.7%! And the highest in FOUR years. Is that a long time in economic cycle terms. Is that almost as bad as IN THE HISTORY OF THE COUNTRY?

Let’s see, we force employers to raise their labor costs, then we don’t allow drilling so fuel costs to their suppliers go up exponentially and we wonder why they can’t afford to hire more people.

Who says the minimum wage doesn’t affect our economy.

originalpechanga on August 1, 2008 at 11:19 AM

Im getting sick of hearing that this “horrible economy” is all bushs fault and they NEVER mention the min wage hike. If they did they would say “well that had to happen” with no corolation.

CaptainObvious on August 1, 2008 at 11:20 AM

If he’ll talk about oil, he’ll be fine. If he’ll talk about Obama’s plan to raise the price of gasoline he’ll be fine.

Our economy is OK, but there are HUGE problems. Our problems can be overcome but the government needs to be on our side. With oil drilling, our government is fighting against us. McCain can say that he understands crises and that is why he changed his position on drilling. We are in a crisis and that demands action – AFFIRMATIVE ACTION to bring down the price of gasoline at the pump.

Democrats are against adding supply which is the only thing they directly control.

Don’t talk about the rest of the economy because the bail-outs are a loser (fannie, freddie, indymac, bear stearns). Just focus on oil and the public will agree with McCain on the economy.

ThackerAgency on August 1, 2008 at 11:21 AM

The biggest change in that market, of course, came from the minimum-wage hike passed by Congress last year.

Thread over. No more needs be said.

And yet you’re going to bat for McCain’s populist rhetoric? Feh.

spmat on August 1, 2008 at 11:23 AM

5.7 overall, with lower numbers among adults is fine.

While this is true JD, the number isn’t as important as the direction. A true conservative would argue as other commenters here have argued that the minimum wage increase is causing the rise in unemployment. Employers can’t afford to ad more jobs.

But the NUMBER is not as important as the DIRECTION JD. 5.7 is basically full employment. But 7 months in a row of contraction is cause for concern. It’s like a little leak isn’t that big of a deal, but a stitch in time saves nine.

ThackerAgency on August 1, 2008 at 11:24 AM

That rise in minimum wage is really helping people put money in their pocket!

lorien1973 on August 1, 2008 at 11:25 AM

The biggest jump in the rates came — again — from teen workers:

Why can’t teen workers find jobs? Are they facing some unmentioned competition?

DFCtomm on August 1, 2008 at 11:29 AM

Ed, as you pointed out in a previous article, the numbers are cooked.

If 51,000 represents .2% of our workforce, we have 25.5 Million workers in the US. If it is an unhappy coincidence caused by rounding and the numbers have gone from 5.5401 to 5.651 or some thing similar, then the workforce maxes out at just under 50 million.

Layers and layers of editors, none of them can do arithmetic.

fluffy on August 1, 2008 at 11:29 AM

Democrats: Helping the po’ folk, one job at a time.

franksalterego on August 1, 2008 at 11:30 AM

Democrats: Helping the po’ folk, one LOST job at a time.

There, I fixed it.

franksalterego on August 1, 2008 at 11:32 AM

Ed,

nice to see you start to “get it” still have a little ways to go yet but admitting there is a problem is a good first step. The “what recession” line of attack is not a winner. In fact it will lead to defeat. The gallop poll numbers showing more voters trust BHO on the economy tells you all you need to know. Once the repub get rid of the “suck it up” and “whinner” mental issues the voters can start to understand the differences. As long as the repubs say the economy is fine then the voters will look at them as out of touch

unseen on August 1, 2008 at 11:33 AM

The Dems must be proud.

ballz2wallz on August 1, 2008 at 11:33 AM

I thought that Nancy told us she would take care of everything once the RATS took control of congress? How’s that been working out for everyone?

sabbott on August 1, 2008 at 11:37 AM

I’m tired of hearing about “pain”. I’m tired of hearing “we’re suffering”. People saying that have no idea what “pain and suffering” is if they think that this economy represents that. I for one love the “suck it up” mentality and would find it refreshing for a politician to stand up and be honest instead of pandering for votes and promising that government will fix everything.

Whiney-assing around never fixed a dang thing and it never will. If you don’t have enough money, quit spending or make more. You live in the greatest country on the planet, if you can’t make it here, your not trying hard enough.

Big Orange on August 1, 2008 at 11:45 AM

The jobless rate for teenagers increased to 20.3 percent in July

Yes, it’s true that the minimum wage hurts entry level employees, but it seems to me that this whole teenage unemployment thing is a bit silly. How do you even measure teen employment accurately? Aren’t most teen jobs part time – nights, weekends, summers since the majority of teens are supposed to be in school?

That being said the high price of gas has probably de-incentivized teens from seeking work, whether it be part time (or full time for those who have graduated high school or dropped out).

Also note that while most sectors show declining employment numbers, health care and mining show an increase:

In July, employment continued to grow in mining (10,000). Mining employment has
expanded by 222,000, or 45 percent, since reaching a low in April 2003. Most of this
increase has occurred in oil and gas extraction and in support activities for this
industry.

Just imagine what a positive affect there would be in employment numbers if we were to push full steam ahead with drilling.

Buy Danish on August 1, 2008 at 11:57 AM

Hmmmm. I don’t know why that line I emphasized with bold type broke up like that. It didn’t look that way in the preview. Let’s try again:

Most of this increase has occurred in oil and gas extraction and in support activities for this industry.

Buy Danish on August 1, 2008 at 12:00 PM

My 17 year old – A student, Eagle scout, tall good looking charming white boy- has been looking for a job for 6 weeks and not even an interview. If their not hiring this guy then they are just not hiring. He wants to work and they won’t even talk to him? He’s not giving up but it is discouraging.

Sefton on August 1, 2008 at 12:04 PM

unseen on August 1, 2008 at 11:33 AM

If you think it is ok for McCain to speak thus so that he does not appear ‘out of touch’ with people who suffer right now, the next logical step would be ‘what can you do for me?’. Which of course leads to McCain (Leiberal Lite) brand of bi-partisan fixes.

The whole article is to point out those REAL people who suffer right now is a very tiny minority. As it had been pointed out OVER AND OVER that people view their own personal finance as good but the overall economy is bad due to 24/7 msm meme “If this isn’t recession, it sure FEELS like it”.

And OUR job is to debunk the mentality that grips this nation.

Sir Napsalot on August 1, 2008 at 12:14 PM

It’s a tough balance to strike. McCain does it best when he focuses on these legitimate concerns about the economy’s health and argues that incentivizing investment and lowering taxes will spur the growth that will provide long-term strength

.

But then he ruins whatever gains he made by talking about capping oil company profits, initiating the business crushing aspects of Kyoto, and other anti-business measures that make employers skittish. You can’t get to the stuff that matters to the individual so long as the business interests don’t trust what is being said about their futures. Teens may be taking the hit this summer but that can easily spread to other no/low-skilled employees in short order if there is the perception that the incoming administration is going to “fix” the economic problems by charging them more to do business.

highhopes on August 1, 2008 at 12:21 PM

Sefton on August 1, 2008 at 12:04 PM

Are you suggesting that it is far easier for white teens to find work? That employers will hire white teens before anybody else?

I’m really making a point here. Your post would have read the same without the inclusion of race. Unless, of course, you are actaully saying that there is a double standard where whites get preferential treatment in hiring. As dirty as racial discussions are getting with Obama in reach of the presidency, one has to be vigilant to bat down these myths like black teens can’t find employment because “whitey” gets special treatment.

highhopes on August 1, 2008 at 12:27 PM

And OUR job is to debunk the mentality that grips this nation.

Sir Napsalot on August 1, 2008 at 12:14 PM

No it isn’t. You can “feel” someones pain without doing anything about it. You can understand the hardships for millions of people without giving charity or handouts. the Americian people don’t want or need handouts. Most Americians I know don’t want charity either.

They want to know that our leaders understand the economic realities of all americians. For a large part of the population the economy is fine, for a large part of the population the economy isn’t fine.

The suck it up mindset costs the repubs elections. The let them eat cake attitude loses elections.

8.8million people are unemployed. 51,000 people lost their jobs last month. Gas is at $4.00/gal wages are going up at around 3%. Inflation is running rampent, the dollar is falling, housing is the worse since 1930′s. The stock market is in a bear market, the bond yeilds are at there lowest in a long time.

The economy is not all rosy. For some it is down right diffucult. Failure to understand that because you and yours are doing ok is not a way to win elections. It makes you seem “out of touch”

unseen on August 1, 2008 at 1:01 PM

Why Gramm got it wrong, at least on tone.

Clueless Gramm is in a mental recession.

MB4 on August 1, 2008 at 1:34 PM

The Labor Department said jobs fell for the seventh straight month in July.

Given Thursday’s disappointing report on gross domestic product growth, Wall Street is becoming more certain that the United States is in a recession — and one that could be prolonged.
- Yahoo Finance (August 1, 2008)

MB4 on August 1, 2008 at 1:42 PM

Gee, mixed messages from the administration, whouda thunk it?

http://www.youtube.com/watch?v=nqWJoVUEV1Y

You know, our fearless leaders make it so easy to make fun of them.

olddeadmeat on August 1, 2008 at 1:46 PM

They want to know that our leaders understand the economic realities of all americians….The economy is not all rosy. For some it is down right diffucult. Failure to understand that because you and yours are doing ok is not a way to win elections. It makes you seem “out of touch”

unseen on August 1, 2008 at 1:01 PM

Read my comment again. Which of our leaders understand the contributors to our current economy?

What you suggested and what McCain did is called pandering. Pandering to get votes (in order to win elections) led to FIXES we can’t afford, and which DO NOT address the real underlying reasons of how we got here in the first place. Pandering let our leaders put a new coat of paint on the house but not doing anything else.

Sir Napsalot on August 1, 2008 at 1:59 PM

Michigan unemployment rate in June 2008 8.5%

I heard the rate in the Detroit area was 9.7%

Unemployment numbers do not mean an economy is bad but Graham made a mistake. Yes the economy is not as bad as the Great Depression with 30% unemployemnt. Yes there is a lot of subjective fear in the public.

The problem is the underlying economy of the world is at critical right now. Credit is drying up. Banks are too overectended to issue small business loans needed to buy materials to meet orders.

This credit cruch is the same credit drought that precipitated the Great Depression. Recently Walmart, hardly poor, went to Japan to borrow money. A half billion. Supposedly for the better terms. Terms have been better in Japan a long time with prime interest rates taken as low as zero to prop their economy.

The credit cruch is not simply the working class over charging their credit cards or buying houses they cannot afford. It is a world wide drought that made all previous debt defficult to re pay and future credit shrivel.

Because the world economy runs at all levels on debt, when credit dries up the dominos fall.

The first ones to fall through the rotted floor are not the perps. Tell them there is no problem while you move your investments to Asia and accelerate the collapse.

McCain did the right thing.

entagor on August 1, 2008 at 2:44 PM

Someone jog my memory…didn’t the Federal minimum wage go up recently?

I’m thinking the answer is “yes”, which will lead me to say cause and effect.

I R A Darth Aggie on August 1, 2008 at 3:08 PM

Bottom line – the economy will be heading downward in November and The One shall be annointed.

corona on August 1, 2008 at 7:39 PM

Economic Free Fall?

The Federal Reserve’s dereliction of duty is central to the financial failures. It betrayed the purpose for which the central bank was first created, in 1913, abandoning the sense of balance the Fed had long pursued and that Congress requires. Most politicians, not to mention the press, are too intimidated to question the Fed’s daunting power, but their ignorance is about to compound the problem. Instead of demanding answers, the political system is about to expand the Fed’s governing powers–despite its failure to protect us. Treasury Secretary Paulson proposed and Democratic leaders have agreed to make the insulated Fed the “supercop” that oversees not only commercial banks and banking conglomerates but also the largest investment houses or anyone else big enough to destabilize the system. This “reform” would definitely reassure club members who are already too cozy with the central bankers. Everyone else would be left deeper in the dark.

The political system, once again, is rewarding failure. The Fed is an unreliable watchdog, ideologically biased and compromised by its conflicting obligations. Is it supposed to discipline the big money players or keep them afloat? Putting the secretive central bank in charge, with its unlimited powers to prop up troubled firms, would further eviscerate democracy, not to mention economic justice.

If Congress enacts this concept early next year, the privileged group of protected financial interests is sure to grow larger, because other nonfinancial firms could devise ways to reconfigure themselves so they too would qualify for club membership. A very large manufacturing conglomerate–General Electric, for instance–might absorb elements of banking in order to be covered by the Fed’s umbrella (GE Capital is already among the largest pools of investment capital). Private-equity firms, with their buccaneer style of corporate management, are already trying to buy into banking, with encouragement from the Fed (the Service Employees International Union has mounted a campaign to stop them). A new President could stop the whole deal, of course, but John McCain has surrounded himself with influential advisers who were co-architects of this financial disaster. For that matter, so has Barack Obama.

The nation, meanwhile, is flirting with historic catastrophe. Nobody yet knows how bad it is, but the peril is vastly larger than previous episodes, like the savings and loan bailout of the late 1980s. The dangers are compounded by the fact that the United States is now utterly dependent on foreign creditors–Japan and China lead the list–who have been propping us up with their lending. Thanks to growing trade deficits and debt, foreign portfolio holdings of US long-term debt securities have more than doubled since 1994, from 7.9 percent to 18.8 percent as of June 2007. If these countries get fed up with their losses and pull the plug, the US economy will be a long, long time coming back.

The gravest danger is that the national economy will weaken further and spiral downward into a negative cycle that feeds on itself: as conditions darken, people hunker down and wait for the storm to pass–consumers stop buying, banks stop lending, producing companies cut their workforces. That feeds more defaulted loan losses back into the banking system’s balance sheets. This vicious cycle is essentially what led to the Great Depression after the stock market crash of 1929. I offer not a prediction but a warning. The comparison may sound farfetched now, but US policy-makers and politicians are putting us at risk of historic deflationary forces that, once they take hold, are very difficult to reverse.

MB4 on August 2, 2008 at 4:06 AM