Scary Numbers and Data

Anyone who has been paying attention already knows that about 50% of Americans pay no federal income taxes. That number alone should give us all pause. But, according to this Fox News article the situation is much worse.

“Right now about 70 percent of Americans take more out of the tax system than  they put into it, according to the Tax Foundation,” Brooks said.”That’s  something that should really alarm a lot of Americans.” (Bold added)

So, if the American Enterprise Institute is correct and 70% of the people take out more than they put in, then only 30% of the people are carrying the load of our federal government. Is that possible? Yes, it is. For example, our tax code allows some people to get refunds from the IRS far greater than what they paid in. These people are not doing anything to screw the rest of us. That is just the way the tax code works. Also, many people who are retired and receiving Social Security benefits have other income; such as pensions, that cause them to pay some income tax; but, far less than their SS benefits. On top of that we have more and more people living off of our welfare system. So, I suspect the American Enterprise Institute is correct when they say 70% of the people take more out of the  tax system than they pay into the tax system. That, my friends, is worrisome.

Let’s look at some more scary data in graphic form. This  graph I borrowed from Inform the Pundits blog. This is a graph of the percentage of people over the age of 16 who are actually participating in the workforce. Note that our current participation rate is as low as it was in the late 1970s. That’s bad but what is worse is the trend.

Labor Participation Rate Put Into Perspective

There is a graph at Zero Hedge that I am unable to embed that you must see. This the authors entire post on the graph
The comedy continues: the April “Not in labor force” seasonally adjusted print: 88,419,000. And yet, the maximum reading permitted by St Louis Fed Not in Labor Force (LNS15000000) graph: 88,000,000. The data has now officially dropped off the chart. No further commentary necessary.
Again, look at the trend of that graph. That is alarming to say the least. Our government keeps reporting that unemployment is dropping; but that is only because fewer people are trying to enter the workforce. These trends are not sustainable for a viable economy. When Obama says the rich are not paying their fair share, he doesn’t know what he is talking about. If these trends continue, there will less and less people paying to support this monster we call government. Now, as the baby boomers retire it will make room for others to find work and that is good but don’t expect the workforce participation rate to improve.
If these trends are not worrisome enough, let me tell you about something else I read recently that I find even more worrisome. I apologize that I did not save the article and, therefore, can not give you a link. It was from a main stream media source is all that I recall. The article said that US businesses were producing goods and service at the same level today as they were before the financial collapse of 2008. That is very good news for American businesses, however, it is not good news for those that need a job. Our businesses are producing at 2007 levels with far fewer people. This means there has been a structural change in terms of productivity. I have to wonder that if this is true for America, might it also be true for Europe and Japan and Korea and others?
So, where are the desperately needed new jobs going to come from? This humble observer sees two possibilities.
  1. Unless there is a dramatic pent-up demand for products and services our companies already produce, jobs are going to have to come from new businesses producing new products and services that we don’t yet know that we need. In other words, jobs will come from innovation. But, we know that innovation flourishes best in free market economies. Therefore, we know that is not going to happen if Obama is reelected.
  2. Another way jobs will be created here and in other developed countries is if or when the BRIC (Brazil, Russia, India and China) countries become more consumer oriented. In other words, the world needs more customers;i..e., more wealth.

I believe both of these things are going to happen. The problem is that  these things take time; possibly decades. In my opinion, many people in the developed countries, who are not accustomed to doing without, are in for a very difficult period of time.

Well, that’s what I’m thinking. What are your thoughts?

27 thoughts on “Scary Numbers and Data

  1. One of the things that stifle innovation is how the patents and copyright laws are set up. For instance, that one guy who invented the carbon nanotube was told in no uncertain terms that if he didn’t sell the rights to it, then he would be kept in court for the rest of his natural life by a very large corporation.

    According to John Taylor Gatto, unplanned and uncontrolled innovation is exactly what the progressive industrialists were afraid of and why they invented the public school system – to keep it stifled.

  2. Obama knows precisely what he is talking about. He is a Marxist. His agenda is to ruin the U.S. while convincing a bunch of idiot Americans that the rich are screwing them over. That isn’t stupidity- that is precisely what he maliciously does.

    Nothing this man does is because of stupidity. It is intentional.

  3. I have a few friends who have “dropped out” of the labor pool -they have effectively given up looking for work. It’s sad but I guess that ‘s the brave new socialist world Americans have voted for. Well if worse comes to worse we can always soak the rich some more.

  4. Economic freedom is the key… and we’ve lost it.

    We are looking at a lost decade. If the screamers on the left thought our wars wasted money, they ain’t seen nothin’ yet.

  5. Having recently attained “early retirement” thanks to the destruction of the healthcare industry, you might be interested to know that States are finding ways of denying unemployment compensation to workers, thus droppiing the unemployment rate. PA just passed a law that requires any pension or other compensation give to you at the end, is taken off your entitlement to unemployment. Thus I am not counted nor thousands of others including all of the workers at BP which were just let go. So PA will now show much improvement in their rate. Thanks Obama

    1. Nothing like kicking you while your down. Well, people better wake up and start looking at the numbers that really matter. We are in one hell of a big hole dug by our statist politicians and it is going to take a lot of work and the right policies to get out of that hole.

  6. I remember when computers came into existence and I was concerned that people would lose jobs because of them. Everyone convinced me that this was a good thing and that computers would put millions to work in new jobs, etc……….but I think we’re seeing that I wasn’t 100% wrong.
    Your information is fascinating and so important.. ,.. But now we have no one who can work with their hands; I saw a young woman who employs many people through an on-line advertising firm she owns and she says she can’t FIND ANYBODY from our schools who can write, make proper sentences, be clever, etc….she hires 2.5% of those whose resumes get past the round file. IMagine?
    Are jobs leaving us? Or have we not the brain power or talent with our hands that we used to have?

    1. Innovations have disrupted our labor force many times since the industrial revolution. Today our education system is not preparing young for the current or future jobs market. This has to change.

  7. I’m an optimist. I don’t believe O will be reelected (his campaign doesn’t act like they believe he will), and I think that entrepreneurial American spirit will prevail. But, yes, the numbers are scary.

  8. Perhaps it’s a good thing, more being taken out than being put in, it’s the fastest way to bring the whole house of cards down. After all, many are shouting and begging people to come to these senses and no one is listening, perhaps they’ll listen when it all comes tumbling down.

  9. There is something in the numbers I don’t understand and can’t figure out.

    It seems me that the FRED “not in labor force” graph should be an inverted reflection of the labor rate participation chart above. They both get their data from the same BLS source data. It isn’t.

    The participation chart has a big bulge, but the “not in labor force” chart doesn’t have a corresponding pronounced dip. Why?

    I’ve been raking my brain trying to figure that out. The only thing I see strange is that the total labor pool – which is only population dependent – has leveled off suspiciously right at the same time as the Great Recession.

    I can’t bring myself to believe that working age US population growth stopped at exactly the same time as the Great Recession hit.

    Maybe retirees are not included in the numbers. That could explain it. It’s still to coincidental.

    If the labor force really has leveled off then any drop in total employment must be the sum of unemployed + retirees + dropouts. I’d like to know what the true dropout number is.

    1. I checked… retirees are included in the “not in labor force” current population survey yet the total US population has a steady linear increase.

      Are we having a 2nd boomer generation coming up? That is the only thing I can think of that could explain a linear growth in total population but a leveling off of population over 16 years of age.

      Another complicating factor, too, is that military personnel are not included in the civilian employment stats. That should not affect the numbers that much.

      I’m totally baffled.

      1. This is just a shot in the dark but could one inclode illegal immigrants and the other not? Also, the FRED curve takes oof about 1990 and the participation curve change begins in 2000. Don’t know what that means either.

  10. Great analysis. As the mom of a young teen, I worry about him not only finding a summer job, but us spending 10’s of thousands for a bachelor’s degree and him still not being able to find decent employment. Rising college costs and rising unemployment among young people is another recipe for disaster.

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