The economic news continues to be grim on the jobs front — partially due to the loss of U.S. jobs:
With the American economic recovery hanging in the balance, private employers added 71,000 jobs in July, up from a downwardly revised 31,000 in June but below the consensus forecast of 90,000. The unemployment rate stayed steady at 9.5 percent.
Over all, the nation lost 131,000 jobs last month, but those losses came as 143,000 Census Bureau workers left their temporary posts, the Labor Department said. June’s number was revised dramatically downward to a total loss of 221,000 jobs. The agency originally reported that the nation lost 125,000 jobs in June.
This piece of data proves that critics of the Obama administration were correct. They had contended that earlier job numbers showing modest gains were partly due to the census jobs. Some Democrats pooh-poohed the idea. But, in fact, that has proven to be the case.
Figures released last week confirmed that the United States economy slowed in the spring, and the Department of Labor’s monthly statistical snapshot of hiring pointed toward a stall in hiring this summer, as employers failed to add jobs at the rate they were earlier this year.
With some economists predicting a “double dip” back into recession and the political stakes for the Obama administration rising as the weeks tick closer to the midterm elections, Friday’s unemployment report renewed pressure on lawmakers to consider the next steps they might take to bolster the economy. Recent indicators focusing on consumer confidence, retail sales and housing appear to put the economy in a holding pattern.
“To the extent that we have a labor market recovery, it’s a slow one,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who projected a gain of 70,000 in private payrolls. “I don’t see anything to indicate that the third quarter will be better.”
In June, 225,000 census workers left employment. It was the first month that jobs across the whole economy had been lost on a month-on-month basis since October last year.
Although the impact of the census explains the job losses, the July figures will fuel fears that the US economy is struggling to recover, particularly as the monthly jobs report is one of the most closely-watched economic indicators in the US.
This is because private sector hiring remains weak. Manufacturing employment increased by 36,000, healthcare by 27,000 and mining by 7,000.
“The modest gain in private sector jobs confirm that the economy remains on a slow growth path, and it’s going to be a long haul to rev up the jobs machine,” said Bart van Ark from research firm The Conference Board.
“The current pace of employment is too slow to replace the more than eight million jobs lost in the recession – not in the next year or two, perhaps even not in the next five years.”
The underemployment rate was 16.5%, the same as in June. That includes unemployed workers who have put their job hunts on hold as well as part-time workers who would prefer full-time jobs. Many people are still too discouraged to jump back into the job market.
The weak jobs picture damages the standing of the Obama administration, which has worked hard to shore up the economy. It also bolsters Republican efforts to win back seats in Congress in this November’s mid-term elections.
The poor showing helps politicians justify some jobs-stimulus tactics already underway, such as the education-jobs measure passed by the Senate this week.
One continued bright spot in the report is the manufacturing sector, which added 36,000 jobs in July.
The Atlantic’s Megan Mcardle writes:
Does this mean we should have been doing more stimulus? I’m still agnostic on this question. Government jobs at the state and local level clearly got bloated during the long boom, and we can’t just keep pumping money into these economies forever while we wait for a recovery. Japan’s experience with government-supported employment does not suggest great things–the government can ease some of the pain, but it can also end up with a terrifying debt-to-GDP ratio and no lasting recovery to help work off the debt.
On the other hand, the long-term unemployment number worries me greatly. I had a conversation with a friend the other day who was pushing back on my support for 99+ weeks of unemployment benefits; at some point, he said, these people have to get jobs, and helping them grow the gap on their resume is not a good long-term strategy. I’m not convinced that many of these people could find jobs–some people are undoubtedly coasting, but really, how far can you coast on $300 a week?
One thing’s for sure, though; adding more people to that pool of job seekers is going to make it harder for those already in it. How many of the people who haven’t worked in two years will simply drop out of the labor force entirely? Every extra week of unemployment past six months represents a destruction of human capital.
The bottom line on these numbers: bad news for Americans seeking jobs and bad news for Barack Obama and the Democrats.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.