AboutThe Inconvenient Good News in the Employment Report
Both Democrats and Republicans were quick to leap on the superficially tepid jobs report Friday to prove their partisan points. Both sides studiously ignored the good news hidden in the details: the private sector added enough jobs in September (137,000) to lower the unemployment rate if all things were equal. All things aren't equal, however; the public sector is still shedding jobs (34,000), and so NET job creation (103,000) was slightly below the level needed to keep pace with population growth. The overall unemployment rate stayed at a very high 9.1% as some formerly discouraged workers began looking for jobs again. The shift from public sector employment to the private sector is healthy and, to use an overused word, sustainable. As the public sector burden imposed on each private sector job decreases, it gets easier and more attractive to create private sector jobs – a virtuous circle.
The fear had been that public sector layoffs would subtract so much demand from the economy that the private sector would shrink as well - a fate that may well await Greece, for example. If the private sector continues to grow, we will reach a point at which it can support the level of public services we want (which is probably still lower than the level of public sector employment we have today). At that point the public sector stabilizes; total employment is not struggling to grow despite the loss of public sector jobs and buying power; and the economy accelerates the way we all hope it will except, apparently, highly-partisan Democrats AND Republicans.
Both average hours worked and the average hourly wage inched up slightly. Employment in finance was down slightly; like public sector employment, a lower ratio of these jobs to goods-producing jobs is a good thing for the competitiveness of the economy as a whole. That isn't to say that we don't need government or banking, just that we don't need as much of either one as we've got. Manufacturing jobs were very slightly down, though; the best news was a reasonably large increase (26,000) in construction, which the Bureau of Labor Statistics analyzes as driven by non-residential construction. Non-residential construction means we are investing in infrastructure and in new places for people to work.
Partisans of both parties, however, studiously ignored any possibility of good news – it doesn't fit their message. Republicans say that the low numbers are one more bit of evidence that President Obama and the rest of the Democrats need to be replaced by Republicans whose pro-business policies will make employment skyrocket. Democrats say the low numbers make it clear that Stimulus II needs to be passed right away and that Republicans are standing in the path of its job-creating potential. Republicans are also ignoring that the recession began with a Republican in the oval office and Democrats are ignoring the failure of Stimulus I to keep employment below 8% as promised.
Countries with governments ranging from the fiscal left to the right all partook in the great recession. What if government policies don't have much to do with the short-term direction of the economy? What if politicians really can't create jobs? It's at least arguably possible that we would have recovered faster if TARP hadn't merged zombie banks into even more too-big-to fail entities which don't lend money to small businesses anyway. Housing may have bottomed out by now if banks hadn't been encouraged to paper over their book-value losses from underwater mortgages and instead had to deal with their customers to restructure loans in both their interests. We might have more jobs today if we hadn't attempted an ill-planned stimulus which actively discouraged states from dealing with program bloat and which didn't build needed infrastructure but did help dig a deeper budget ditch and encouraged companies to chase grant dollars rather than customer value.
But this campaign is all about jobs! Both sides have to use the fear of what the other side will do to us to get us to vote the rascals out (and the new rascals in). With the country's opinion of politicians at an all-time low (at least since there's been polling), we're much more likely to vote against than vote for. Isn't that what "change" was all about? So neither side wants to see an economy which is actually starting to heal despite the ill-designed treatments they forced it to undergo. Neither side wants to see the shoots of economic spring. What if tax revenues were to increase because of prosperity? Then we wouldn't have to raise taxes as the Democrats want or cut government services as much as the Republicans want. Neither side wants to campaign on boring issues of how government ought to do its job while we do our best to create jobs for ourselves and our neighbors.
Caution: I'm deliberately being a Pollyanna to make the point that politicians will be the last to see a recovery. One shouldn't judge the direction of an economy from a single monthly report which is, itself, statistically derived and routinely corrected. That's as dumb as judging climate from a single year's weather.
Related posts:
Where Did All the Tax Revenue Go?
Ben Bernanke's Blunder: How NOT to Solve the Mortgage Crisis
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