A sputtering recovery crying out for a jump start. That is the picture confirmed by the May employment and unemployment report released June 1st by the U.S. Bureau of Labor Statistics.
The unemployment rate (seasonally adjusted) inched up to 8.2% between April and May in response to the deficiency in the rate of job creation over the same period. Only 69,000 (seasonally adjusted) jobs were created, far short of the 113,000 that are needed simply to keep up with the growth in the labor force that is caused by population growth each month.
It comes as no surprise. In the U.S. private spending and lending continue to be hobbled by the large overhang of debt resulting from the financial binge and bust of the 2000s. It is most evident in housing foreclosures and the dearth of construction activity. Throughout the economy, however, demand is weak and federal government action to stimulate it, heretofore inadequate, at best, is now dwindling to virtually nothing.
None of this is inevitable. What is needed is a large government investment in the creation of employment in infrastructure, health and human services, education and energy efficiency. Long advocated by CPEG, such a program would create over 12 million living wage jobs that would supply most of the missing demand.
The picture of the sputtering, almost three-year-old, recovery was further highlighted by refinements of the employment data for the preceding two months. Job creation was revised downward from 154,000 to 143,000 for March, and for April, a whopping 38,000, from an already weak 115,000, to only 77,000.
Looking back over the last seven months reveals a small upswing in job creation at the end of 2011 and the beginning of 2012, but then the marked slackening of springtime job growth noted in the preceding paragraph. This does not add up to a picture of consistent or rapid progress. Nevertheless, the monthly average job creation over this recent minicycle (190,000 jobs /month) compares favorably with the average monthly number of jobs (148,000) created over the last year.
If the recovery continues to average 190,000 new jobs per month, thereby adding 77,000 more than those needed simply to accommodate population growth, it will take over 8 more years to regain the 8.8 million jobs lost in the collapse of 2008-9. At that point approximately 63% of the working age population will be employed, in contrast with the approximately 58.5% that we have had over the last 2 1/2 years.
Among those employed, a stubbornly large number consists of people who worked part time because they could not find full time work. That number, approximately 8 million, has come down by only about 5% over the last year, further evidence of the weakness of hiring. Another 19 million people work part time for what are officially called “non-economic” reasons, although this group contains many people whose decisions factor in the weakness of the job market. One thinks of decisions to return to school part time or to do more of one’s own child care because working doesn’t cover the cost of full time child care. The availability of full time work at a living wage would surely change some of these and many other decisions.
Similarly, over one third of the working age population (almost 88 million) remains outside the labor force altogether. About 3 million of these people have stopped looking for work because they have recently become too discouraged or because have short term responsibilities that interfere with their job search. The remaining 85 million include an uncounted number of people who have chosen unremunerated or informal work that is not counted. How many of these people would now enter the labor force if there were sufficient demand for labor cannot be stated with any precision. As recently as 2000, however, those outside the labor force constituted 67.1% of the working age population. In contrast the May, 2012 figure was 63.8%, amounting to over 8 million missing workers and earners.
A very large jobs program would employ most of the officially unemployed, many of the part-timers, and a great many of those outside the labor force. The resulting increase in the demand for goods and services would lift the entire economy. Without some such program the country may be doomed to an indefinite future of sputtering recovery at best, and renewed contraction of the economy at worst.