Economy Adds a Disappointing 148,000 Jobs in September
on Tue, 22 Oct 2013
The Labor Department reported the economy created 148,000 jobs in September after adding 193,000 the prior month--forecasters had expected a much better showing. Unemployment fell to 7.2 percent, largely because 91,000 more adults chose not to participate in the labor force.
In September, anticipation of the government shutdown may have somewhat influenced hiring, but those effects are difficult to discern. For example, while uncertainty caused firms to delay, it may have encouraged others to rely on multiple part-timers actually boosting the jobs count.
In October, some impact from furloughing government employees will be felt, but experience with past similar events indicates the overall drag on the economy and jobs growth will prove imperceptible by next spring. Simply, much of the lost government and consumer spending will be made up, especially since federal employees will receive back pay.
In 2013, nearly half of the employment growth has been in part-time positions. Since January, 456,000 more adults reported working part-time positions, while 525,000 indicated they had obtained full-time employment.
Obama Care's mandates for employer paid health insurance coverage encourage more part-time hiring. Also, driving this trend are the growing importance of services like retailing and hospitality, rigidity, and visceral anti-business campaigns of unions--such as those targeting McDonalds and Wal-Mart.
The jobs count may be up, but for recent college graduates and older adults seeking positions the situation is grim. Adding in part-timers who want full-time employment and discouraged adults who have abandoned searching for jobs, the unemployment rate becomes 13.6 percent.
Even with more full time positions, the pace of jobs creation is well short of what is needed. About 360,000 jobs would lower unemployment to 6 percent, but that would require GDP growth in the range of 4 to 5 percent. Over the last four years, the pace has been a paltry 2.2 percent.
Stronger growth is possible. Four years into the Reagan recovery, after a deeper recession than Obama inherited, GDP was advancing at a 5.1 percent annual pace, and jobs creation was quite robust.
President Obama's policies carry some burden for slowing growth, such as restriction on domestic petroleum development and reluctance to respond to Asian export subsidies and undervalued currencies that steal American manufacturing jobs, as well as its overly aggressive regulatory posture. Those have institutionalized a buyers' market for day labor and doomed many recent college graduates to a lifetime of debt as they can't find jobs permitting them to pay off burdensome student loans. And ObamaCare has made hiring older workers a greater financial liability.
More rapid growth requires importing less and exporting more. Dealing with the $450 billion trade deficit requires drilling for more oil offshore and in Alaska and substantively addressing Chinese and other Asian governments' currency manipulation. Obama has flat-out refused to even discuss proposals from liberal and conservative economists alike on those issues.
What is essential is right-sizing business regulations to make investing in new jobs less expensive. Regulatory protections for the environment and consumers and to ensure financial stability must be delivered cost effectively to add genuine value.
Overall the president must cultivate a climate more receptive to domestic investment. The administration's strident regulatory policies and rhetoric are creating a crisis of confidence in the business community as surely as George Bush's neglect cultivated arrogant and tragic risk taking on Wall Street.
More jobs require trimming back on tax increases and spending cuts, and more realistic and less-ideological trade, energy, and regulatory policies. These are words the White House and many on Capitol Hill simply do not want to hear.Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. Follow him on Twitter.