How should progressives respond to the latest reported drop in the official unemployment rate?
The sudden decline in joblessness from 8.5% to 8.3% -- after a similar decline a month earlier -- has caught many observers off guard. But as most economic experts admit, the reality behind the latest jobless decline is nowhere near as rosy as it seems.
That's because the official jobless rate -- based largely on monthly filings for unemployment insurance -- doesn't record how many Americans are working part-time, have simply given up looking for work -- the "chronically" unemployed, some without work for two years or more -- and those compelled to work in jobs that don't pay them enough to live on -- the so-called "sub-employed."
If we combine these groups, the de facto or effective unemployment rate could be as high as 16% or even 22% -- and it may well be getting worse.
Experts say the economy is producing jobs, but apparently not fast enough to replace the ones being lost. There's also the issue of just what kind of new jobs are being created. According to Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, many of the jobs people are taking don't match the pay, hours, or benefits of the 8.75 million positions that have vanished in the recession.
"In the last recovery we were adding management jobs at this point, and this time it's disappointing," Ashworth told Business Week last year. "The very best jobs? We're still losing those."
Conventional wisdom holds that if the jobless rate falls below 8%, Obama's probably a shoo-in to win a second term in November. Two past incumbents, Ronald Reagan and Bill Clinton, also faced a challenge from the opposition party after economic conditions turned sour, but they quickly rebounded and won landslide re-elections when the jobless rate started trending downward.
In fact, unemployment skyrocketed to 11% during Reagan's first term, which was higher than the peak of 10% reached under Obama in 2010. But the 1981-1983 recession wasn't so deep as the current one, and once it ended, after a typical two-year trough, the US economy took off.
Now, with so much structural unemployment lurking behind the job numbers, and GDP growth still so anemic (despite some promising signs), no one's ready to predict when a "real" recovery may occur.
Which means that even a further drop in unemployment below 8% is no guarantee that Main Street voters won't abandon the president come November. In fact, polls show that independent voters in hard hit swing states in Florida and the Midwest are increasingly open to Republican arguments on the economy, leaving Obama's re-election in jeopardy.
And Wall Street, which helped bankroll the president's election in 2008, is already shifting its support from Obama to Mitt Romney, who promises them more lavish support and obeisance.
That leaves progressives in the uncomfortable position of having to play "make believe": defending Obama's jobs record -- 23 straight months of job creation, and nearly 4 million new jobs -- knowing full well that the reality behind these numbers remains as troubling as ever.