The Labor Department reported the economy added 162,000 jobs in July, after adding 188,000 in June. Unemployment fell to 7.4 percent, largely because 240,000 adults left the labor force.
Businesses continued the shift toward contingent workers. In July, 103,000 more Americans reported working part-time.
The growing importance of services like retailing and hospitality and the rigidity and visceral anti-business campaigns of unions drive this trend; however, ObamaCare’s mandates for employer paid health insurance coverage also impel the use of more part-time workers.
Overall, the jobs count may be up, but for most working families and recent college graduates the situation is grim. Adding in discouraged adults and part-timers who want full-time employment, the unemployment rate becomes 14.0 percent. And, for many years, inflation-adjusted wages have been falling and income inequality rising.
President Obama’s policies and attitudes toward business carry some considerable burden of responsibility. Those have institutionalized a buyers’ market for day labor and damned many recent college graduates to a lifetime of debt as they can’t find jobs permitting them to pay off burdensome student loans.
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.
Near term defense cutbacks President Obama extracted from Congress last fall have subtract some $62 billion from federal purchases. An additional $42 billion in sequestration cuts and $200 billion in higher taxes demanded by the president are further reducing government consumer spending in the second and third quarters.
Longer term more rapid growth requires importing less and exporting more. Dealing with the $540 billion trade deficit requires drilling for more oil offshore and in Alaska and substantively addressing China and Japan’s undervalued currencies and other protectionist policies. Obama has flat out refused to even discuss proposals from liberal and conservative economists alike on these issues.
Healthy growth also requires sound stewardship at the Fed–not a new chairman bent on inflating the country out of its problems or inclined to support left-wing causes aligned with those hostile to business.
Essential is right sizing business regulations to make investing in new jobs less expensive. Regulatory protections are needed to protect the environment, consumers, and financial stability, but those must be delivered cost effectively to add genuine value.
Overall, the president must cultivate a climate more receptive to domestic investment instead of treating private-sector leaders as likely recidivists to a white collar prison for those guilty of environmental and other crimes against the people. The administration’s anti-business 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.
Overall, 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 does 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.