Jobless Rate Really Isn't All That Bad

It's pretty important to have a job.

Being unemployed must really be quite unnerving. I am not speaking from experience, here.

I have always had a job.

The current unemployment rate is hovering around the 5.5 percent range.

That's down from mid 2003 when it was around 6.2 percent.

But how quickly we forget. In 1983, unemployment reached nearly 11 percent. As recently as 1992, it was nearly 8 percent.

The lowest unemployment rate since 1980 was in early 2000 when it dipped to around 3.8 percent.

It's bad when people are out of work. But as unemployment rates go, 5.5 percent isn't really big news - except in an election year.

And when it's the only economic news that isn't really positive.

Consider the following:

• Total cars and light truck sales totaled 16.09 million units in January. That number has teetered between 16 and 18 million units per month throughout 2003. The historic high number, in late 2001 was 21 million.

• Housing starts reached 1.66 million in December. That's an historic high. Existing home sales also set a record in December at 6.47 million. Most of this is fueled by low mortgage interest rates.

• Manufacturing inventory sales ratios reached 1.41 months of sales in December for durable goods and 1.1 months of sales in nondurable goods. That's down significantly from 2001.

• Retail sales numbers are up. Retail sales excluding autos are up.

• Personal income peaked in mid 2003, posting a 1.2 percent quarterly increase. Personal income fell to even in the fourth quarter.

• Real domestic purchases were up 3.7 percent in the fourth quarter.

• Real gross domestic product was up 4 percent in the fourth quarter. In the third quarter, GDP posted a sizzling 8 percent gain.

• The index of leading economic indicators reached 114.3 in December, up from 110 in December 2001. (The index uses a baseline of 100 in 1996.)

• The consumer price index - inflation - sat at 1 percent in December.

• Compensation per hour for workers in December was up 3.3 percent from four quarters earlier. Worker output per hour was up 5.3 percent from four quarters earlier.

• Hours worked in January averaged 40.9 per week, up from 40 in 2001.

• Corporate profits rose from $700 billion in the third quarter in 2001 to $1.1 trillion in the third quarter of 2003.

So, if you're a Democrat, of course you must beat up on W by saying "jobs, jobs, jobs, jobs, jobs, jobs, jobs" because it's the only thing in the economy you've got to talk about.

But let's think about this for a moment.

If industrial production is up in major industries, that means an increase in capital expenditures. History tells us that increases in capital expenditures are followed by dramatic job growth.

So where are the jobs?

Regardless of what the politicians say - Democrat or Republican - I don't think we're going to see dramatic job growth in this economy.

I think a 5 percent unemployment number is about right for the economy these days.

In the past five years, the economic landscape has changed in many ways that preclude a low unemployment rate.

In the boom years in the late 1990s, lots of companies overstaffed and over capitalized.

They allowed inventories to grow too large.

Then a recession, followed by 9/11, followed by anthrax, followed by corporate scandals, followed by a near-collapse of the airline industry all precipitated a change in the way Americans do business.

Suddenly businesses were looking for "value added" in every position.

Businesses downsized. They outsourced. They found ways to be leaner and meaner.

My guess is everybody reading this has seen this type of austerity in their place of employment.

And look at those GDP numbers. Despite the unemployment, productivity is gaining.

Businesses, quite simply, are doing more with less.

I believe that today's jobless rate has a lot more to do with high productivity per worker than it does the government's economic policies.

I believe today's productivity is technology-driven. And technological advances aren't going to grind to a halt anytime soon.

That's why we're not seeing job growth.

But so much is positive in the economy right now, it's almost bizarre to listen to Democrats like John Kerry preach gloom and doom based on jobs.

Listen to this guy:

"Everywhere I've been in this campaign, I've seen the wreckage of the Bush economy. I've met working Americans who are getting the short end of the stick. Jobs on the run. Wages and salaries dead in the water. Health care unavailable and unaffordable. A sense of powerlessness - people waking up everyday worried that their job is about to disappear and a lifetime of dreams will be destroyed."

Everywhere he's been? In what country? Namibia? His comments are abject nonsense. "Jobs on the run?" Unemployment is trending down, not up. "Wages and salaries dead in the water?" Compensation per hour for workers was up 3.3 percent in December.

Kerry makes it sound like its 1933 in the height of the Great Depression when unemployment reached 24.9 percent.

He's blowing smoke and he knows it. But that's politics, I suppose.

As it is, the jobless rate - at 5.5 percent - is hardly shocking by historic standards and the current trend is downward.

There is consensus among many economists that at any given time in the labor market, roughly 4 percent of the workforce is unemployed while between jobs.

Plus, there are some people who wouldn't take a job no matter how many jobs were available.

If that's true, that means somewhere in the range of 98 percent of everybody who wants a job either has one or soon will. To me, that just is not a huge problem.

But what's a Democrat to do?

Preach economic disaster when their really isn't any, I guess.