REALITY CHECK LABOR FORCE DROPOUT

Posted on 13. Feb, 2015 by in Uncategorized

Since learned Editors like Ned Barnett and Doug Clark have suddenly begun writing about people dropping out of the Labor force in North Carolina, predictably bashing the Republican Legislature over it, here’s some perspective the Republican bashing Editors ignore.

First, people’s declining willingness to seek jobs is a national trend. Labor force participation peaked in 2000 at 67.4% of adults falling to 62.8% now accord to J. P. Morgan research. This graph from the Labor Department shows it plunged in the recession and kept falling during the Obama Recovery the media touts.

J. P. Morgan adjusts the numbers to kick out ages 16-24, where students can subsist off parents or student aid, and older ages 65+ to remove the explosion of retiring baby boomers. They still find a significant drop in work effort of nearly five percent among prime working age adults.

Among some of the other reasons for lower work effort , the bank economists indicate the 15% increase in the proportion of prime working age adults getting disability plays a role. TV ads from tricky lawyers urging people to claim some ailment run constantly. Then they point out an astounding 22% of the population has a criminal record holding back job prospects and, of course, there are the discouraged workers who gave up.

But there’s another factor nobody wants to talk about, especially not our Editor friends. That’s the mushrooming growth of welfare entitlements which can replace the need to work.

George Will writes “America’s welfare state transfers more than 14 percent of gross domestic product to recipients, with more than a third of Americans taking “need-based” payments. In our wealthy society, the government officially treats an unprecedented portion of the population as “needy.”

Consider the cash and in kind benefits that a typical welfare recipient in North Carolina can sign up ,for , although all may not, and compare the value of a welfare package with the value of a job.

Welfare $3264

Food stamps $6312

Housing aid $9393

Medicaid $7452

WIC $1083

Energy aid $ 338

Emergency food $ 300

Total $28,142

Adjusted for inflation, the value of welfare has increased nearly $4000 since 1995 and North Carolina tops the south in benefits. Welfare can be the equivalent of a $12.38/hour job. Of course, this doesn’t factor ObamaCare’s Medicaid expansion which makes the welfare option more attractive for able bodied, working age adults without children.

The Congressional Budget Office recognizes the impact income based entitlements have on employment reduction. Income from work reduces benefits which is why CBO estimates workers will cut employment hours equal to two million fewer jobs under ObamaCare.

Finally, is it only a coincidence work force participation peaked during the dot com boom and after the Clinton -Gingrich work requirement for welfare the Obama Administration relaxed? The drop in work force participation might have more to do with policies the media likes than the conservative Legislature they loathe.