Paige McKenzie, NewsMax.com
Wednesday, March 3, 2004

No doubt many of the same naysayers who are criticizing President Bush’s job record now were giving Bill Clinton the credit for the turnaround of the 1990s. Few Americans realize that signs were warning of the coming “Bush” recession two years before Clinton left office.

McDonald's Corp. laid off employees from its corporate office for the first time in history. The number of bankruptcies declared in the U.S. exceeded the number of college graduates for the first time. Of course, all everyone could talk about was the great booming Clinton economy, aka bubble.

Now, a team of economists at the University of Michigan has made a prediction. Within the next two years 5.2 million jobs will be added to the American economy, and unemployment will drop to 4.8 percent, an event John Kerry would no doubt receive credit for if elected.

Invisible Workers

Job trackers at the Bureau of Labor Statistics have a lot of blind spots. The bureau is good at counting people who work for large companies in well-defined, long-held occupations. But the bureau doesn't count self-employed people or partners in unincorporated businesses at all. And that’s exactly what industries that were adding jobs even during the recession consist of.

Denise Revely used to work in an electronics factory. Now she works for herself, the New York Times reported. Her business has been in the black ever since opening in July 2003. But as far as official statistics are concerned, she doesn't exist.

Neither do a lot of people in fields such as The American Massage Therapy Association, which says the BLS thus overlooks about 200,000 massage jobs.

The bureau has missed more than 300,000 manicurists. "This is not a gray market business," Cyndy Drummey, the editor of Nails, told the Times. "It is licensed and regulated."

Yet because this business is wildly decentralized and doesn't fit traditional categories of what constitutes a job - most manicurists are independent contractors or shop owners - it can add tens of thousands of jobs without catching the government's notice. And behind each manicurist are people making the tools of the trade.

This list is by no means all-inclusive. Virginia Postrel, author of "The Future and Its Enemies," writes, "In every booming job category I looked at, official surveys were missing thousands of jobs. As the economy evolves, however, this bias against small enterprises and self-employment becomes more and more significant. By missing so many new sources of productivity, the undercounts distort our already distorted view of economic value -- the view that treats traditional manufacturing and management jobs as more legitimate, even more real, than craft professions or personal-service businesses."

The BLS estimates that only 432,000 Americans, less than 0.3 percent of the workforce, qualify as "discouraged." That means, says economist Paul Kersey, that with the unemployment rate of 5.6 percent, the U.S. could be close to full employment.

A.G. Edwards chief economist Gary Thayer predicts a further drop, down to as low as 5 percent by November.

Heavy on Pessimism, Light on Truth

The favorite phrase of the critics is “the jobless recovery,” which they repeat ad nauseum. But it’s a myopic view at best. They’re ignoring the new culture of small-business self-employment.

Unfortunately, the addition of 2 million workers last year alone, largely created by higher take-home-pay rewards from lower individual tax rates, aren’t counted in the BLS Payroll Survey for at least 18 to 24 months.

Even New Mexico Gov. Bill Richardson, a potential Democrat veep candidate, jumped on the job-myth bandwagon in his Spanish response to Bush’s State of the Union Address in January.

Richardson claimed in his speech that Hispanics have lost 300,000 jobs since Bush took office. In reality, however, they have lost 600,000 in 10 industries. They have also gained 900,000 in 10 other industries – a net gain of 300,000 – according to the Pew Hispanic Center. In fact, according to Pew, employment among Hispanics has been growing at a rate of 2 percent.

In her company’s monthly Hispanic markets newsletter, Krissa Price, director of marketing for Lexicon Marketing USA, wrote: “At a time when the nation’s economy is stagnating, the U.S. Hispanic market is emerging as some of the most promising areas for growth. While the economy has lost nearly 1.5 million jobs since the end of 2000, employment among U.S. Hispanics has grown. This growth has been fueled by increases in the Hispanic population and the need for businesses to find cheaper labor.”

According to the Pew study, the reason why the Hispanic unemployment rate increased despite having gained more jobs is due to the remarkable growth of the Hispanic population, now having surpassed blacks as America’s largest minority.

Greenspan says that "stunning productivity gains have obviated robust increases in business payrolls."

"Liberal Yale economist Ray Fair has perfected a model that predicts election outcomes," writes Larry Kudlow, CEO of Kudlow & Co. and co-host of CNBC's "Kudlow & Cramer."

"Recently his model has been re-estimated by the well-respected Macroeconomic Advisors of St. Louis. Both models came within a few tenths of a percent of accurately predicting the popular vote in 2000. Taking into account today's strong economy, both predict a Bush victory with roughly 60 percent of the vote come November.”

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