Communications

**UPDATED: The Discouraged

Today’s job report highlights a crucial fact: the unemployment rate does not nearly measure the depth of distress.  An increasing number of unemployed Americans are simply giving up and ceasing to look for work. According to the report, there were an additional 136,000 workers became discouraged from seeking work last month. That brings the number of discouraged job seekers to 1.1 million from 734,000 one year ago.

They are discouraged for good reason: 20,000 more jobs were lost in January.   All told, more than 2.8 million Americans have lost their jobs since the stimulus was signed into law. Expect liberals to make a clarion call for additional spending to spur job creation, but the evidence is accumulating that their stimulus has failed miserably to breathe life into the economy. Piling on more taxpayer dollars would be irresponsible and ineffective.

Providing hope to the discouraged starts with encouraging small business owners – tax relief, paying down the deficit and loosening the stranglehold of burdensome regulation. They need to know the roof won’t cave in from the weight of additional costs from Washington. Simply put, another stimulus is a non-starter.

MEMORANDUM

The Takeaway: The Underemployment Rate
The Labor Department will release the January employment report tomorrow. Expect another weak report, with jobs continuing to be lost or - at best - up marginally. However, the statistic to be closely watched is the underemployment number, which provides the truest measure of employment.

Underemployment is a much different marker than unemployment. For example, in December, underemployment was 17.3 percent compared to an unemployment rate of 10.0 percent. Underemployment is broad measure of underutilized workers that includes the unemployed, as well those forced to work only part-time. For everyday folks, that means the construction worker that only gets 15-hours a week, and some weeks none at all. As you can see, it's a more clear and accurate lens in which to view the hardships facing working moms and dads.

What Else to Look For:
Depending on the numbers in the jobs report, liberals will use one of the following lines of reasoning:

• If the report shows signs of labor market life, liberals will argue it means the stimulus bill "is working."

• If the report is weak, liberals will argue for even more government spending.

The Bottom Line: Identifying the Problem

• We will not have a sustainable recovery until small businesses and entrepreneurs - the traditional engines of job growth - are re-started.

• Unfortunately, we face a future in which the economy is festooned with excessive government spending, the prospect of higher taxes, higher inflation, expensive health mandates, draconian EPA regulation, restricted international markets, and government-supported unionization.

The Way Forward: Pathways to Job Creation

• What can be done? The first step should be to do no harm. The second step is to abandon borrow-and-spend "stimulus."

• Lastly, it is time to eliminate the threat of deficits as far as the eye can see. Deficits raise the potential for financial market turmoil, draconian tax increases and dangerous rises in inflation.

• The economics are simple: If you are a small business owner or an entrepreneur with a great idea, why would you take the risk of expanding your company or starting a new one with so much uncertainty and the threat of massive tax and other cost increases hanging over your head?

• For Americans living in the real world the answer is simple--you wouldn't. Unfortunately, the Administration and Democrats in Congress seem to be detached from those Americans and immune to this logic. The result is job-killing policies and debt our children can't possibly hope to repay.