Did you know that 355,000 people were laid-off last week because Obama was re-elected? Or, at least, that’s what many Conservative activists would have you believe. Apparently, there is this growing meme going around the internet that companies are laying people off because Obama and “Obamacare” is here to stay. This is all likely to be typical partisan bull-crap. I never thought I’d have to explain the inner-workings of the Free Enterprise System to the party that claims to love capitalism. But… here we go. We’ll start with basic concepts and then move on to “the math”. By the end of this post, you’ll know why this meme is likely to be crap, the numbers backing up that assertion, and when (and how) we’ll have the numbers to prove it.
First of all, this is a huge country with a huge economy. Large numbers of people are being hired and fired, laid-off and brought back every single day. Additionally, large numbers of business are being started and bankrupted, growing and shrinking, every single day. The beauty of free enterprise is that nothing ever stands still. Things are moving and changing all the time which causes other things to move and change and so on. This is the reason it is so hard to study macro-economies. There are so many micro-economic things going on you can never be 100 percent certain of which event caused another event.
The best anyone can do to understand how an event affects the economy is to gather economic numbers(like jobs and sales data) and compare trends to certain events. Unfortunately, even for the professionals, that is not an easy task. Nor, can many things be definitively proven. That’s because, as any scientist will tell you, “CORRELATION DOES NOT IMPLY CAUSATION“!. That phrase should be tattooed on the wrists of every economist so they have to stare at that phrase while typing up papers and reports that make that very claim.
In the beginning of the post I claimed 355,000 people lost their jobs last week because of the election. That of course was a half-truth. In an economy as big as ours we have 100s of thousands of people losing their jobs every. single. week. Even in a healthy and growing economy. The fact is, we have even more people being hired every week to offset that. But, the right-wing aren’t using employment numbers to make their current claim(we won’t actually know those numbers until Thursday).
The right-wing is pointing to companies that are announcing massive lay-offs as proof, PROOF! that Obama and “Obamacare” are killing jobs. So let’s look at those numbers. Fortunately, the department of labor keeps statistics on how many companies have a “mass layoff event”. Their definition of a mass layoff event is when at least 50 initial claims are filed against an establishment during a consecutive 5-week period. Fortunately, they have the entire archive of their past data posted online.
As it turns out, there are a lot of mass layoff events every month. For the last year there are usually over 1,000 mass layoff events every month (not seasonally adjusted). I add that “not seasonally adjusted” because mass layoff events tend to fluctuate depending on the time of year. For instance, post Christmas time will have a lot of lay offs as stores get rid of their extra holiday help. Therefore, instead of comparing month-to-month numbers, it is sometime better to compare this months number to this month of last year. That is what we’re going to do.
November 2011 had 1393 mass layoff events. Last I looked at a calendar there were 30 days in November. So that means, on average, there would be at least 46 mass layoffs every single calendar day during a Normal November. This is assuming mass layoffs happen on weekends as well. If we assume mass layoff events only happen during the week the average would be even higher. But since I want to give the right-wing the best chance to prove their crazy theories, I’ll stick with the lower number.
Let’s compare that number to right-wing doomsday claims. If there are mass layoffs we should be seeing an increase over the average rate of 46 a day. We should be seeing 50, 60, or 70 a day to register an increase in layoffs. If there was a massive movement I would expect to see double of the average(like happened in 2008 when the Bush economy was spiraling downwards).
Exhibit A: The article I linked to earlier has a scary-sounding tweet that claimed that “45 companies announce layoffs in last 48 hours[after Obama’s re-election”. In a 48 hour period, we should see an average of 94 mass layoff events. That means their scary claim would be less than HALF the pace of mass layoffs during a typical November. If their claim is true, that would be a low number and something to be celebrated.
Exhibit B: The Blaze, home of Right-Wing Glenn Beck, has a B.S. article listing 37 layoffs and “closure” announcements in a 48 hour period. Even smaller than the claim in exhibit A. Additionally, they cheat by listing EVERY layoff announcements, even ones that are less than 50(my 46 number counts only those over 50). They are still very VERY far short of an increase, let alone a doubling.
Exhibit C: These right-wing bloggers have now setup a website to try and document supposed mass layoffs. Here are their numbers since the Wednesday after Obama was elected(combining layoffs and store\plant closures): Wedenseday was 25, Thursday was 23, Friday 17, Saturday 25, Sunday 1. I don’t know if this site cheats like the Blaze and lists layoffs that are less than 50 – I’ll let somebody else click and read each announcement.
As you can see these listing are far short of even reaching the typical November rate and therefore offer absolutely ZERO proof of mass “revenge” or “Obamacare” layoffs. I suspect that not all mass layoff events are reported. I’m guessing the real number is higher than these articles report, but they are also likely at a typical November rate.
Unfortunately, the mass layoff event data isn’t printed quickly. It takes time for the department of labor to compile the statistics and interview companies about their layoffs. For instance, September’s numbers weren’t reported until October 23rd. Which means we won’t get November’s number until around December 23rd. (November 23rds report will be of October, before Obama’s reelection).
When the report does come up, I recommend looking at seasonally adjusted numbers, to see how much different the number is from October. The seasonally-adjusted numbers averages out seasonal affects. As long as that number is near October’s it will mean there was no mass “revenge” or “Obamacare” layoffs. Additionally, you can check the raw numbers and compare them to the previous November numbers. Unless that number is twice it was last year, it’ll mean no mass layoffs happened above and beyond normal economic activity.
My educated guess is that these layoffs would’ve happened anyways. For those claiming they are laying off because of Obama, I think some business people are making political claims to serve a personal agenda.