On Tuesday, the Labor Department is expected to report the economy added 185,000 jobs in September and unemployment was steady at 7.3 percent. Part-time positions dominate the jobs picture.
Since January, 848,000 additional Americans report working part-time, while only 35,000 more say they obtained full-time positions. In significant measure, the part-time economy is driven by ObamaCare health insurance mandates, which push down wages in industries like retailing and restaurants and widen income inequality.
September data predates the government shutdown, and the closure will have few impacts on employment several months from now. About one-half of one-percent of employed workers were furloughed for about two weeks. After the Clinton-era shutdown, the economy recovered lost ground quickly and it hardly had any lasting effects on retail sales.
Government workers will receive and spend back pay, and many tourist dollars not spent at government-run museums and parks, for example, were spent in other places.
Unfortunately, hardening business expectations for permanently slower growth and more burdensome regulations are changing labor market and social conditions.
These days, most new growth is concentrated in the auto, housing, and on-shore oil and gas sectors, while the rest of the economy languishes. New college graduates often work at unpaid internships, while taking part-time jobs at places like Starbucks to meet minimal living expenses. They put off marriage and childbearing, which also drags on consumer spending and growth.
Adding discouraged adults, who have quit looking for work altogether, and part-timers who want full-time employment, the unemployment rate is close to 14 percent.
Second quarter GDP advanced 2.5 percent, but third quarter estimates, also unaffected by the shutdown, are expected to show growth slowed to about 1.8 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 over three years, but that would require GDP growth in the range of 4 to 5 percent.
Stronger growth is possible. Four years into the Reagan recovery, after a deeper recession than President Obama inherited, GDP was advancing at a 5.1 percent annual pace, and jobs creation was robust.
Unnecessary oil imports and trade deficits on manufactured products from China and other Asian countries tax demand for U.S. goods and services, slow growth, and subtract more than four million jobs.
Absent U.S. policies to develop readily available oil offshore and in Alaska and effectively confront Asian governments about purposefully undervalued currencies and protectionism, the trade deficit will continue to steal growth and American jobs.
Dodd-Frank regulations make mortgages and business loans more difficult to write–especially for struggling regional banks who service small and medium-sized businesses. The recovery in housing construction, though welcomed, is lackluster compared to past economic expansions. In turn, this slows expansion in building materials, major appliances, furniture, and other durable goods.
The high cost and slow pace of regulatory reviews are a constant business complaint and curb investment spending, and Washington shows no signs of listening.
Just as excessive bureaucracy tied in knots the Affordable Care Act health insurance exchanges, the burdens imposed by Obama-era regulations targeted on private businesses far exceed dollar outlays for compliance. Those slow down new investments to the point that businesses look to China and other Asian locations for a workable environment.
Regulatory assessments needed to protect consumers and the environment must be timely and at minimum cost to add genuine value. Otherwise, excessive bureaucracy sends jobs to Asia and imposes great social costs.
Absent smarter energy, trade, and regulatory policies, slow growth and high unemployment are becoming permanent.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland School, and a widely published columnist. Follow him on Twitter.
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