It wasn’t a great start to a Friday. The latest employment numbers came out on July 8, and they certainly didn’t paint a pretty picture. According to the Labor Department, nonfarm jobs rose by only 18,000 in June, woefully short of the 90,000 economists had predicted. To make matters worse, the May jobs increase was revised downward to a paltry 25,000. The disappointing numbers bumped the official unemployment rate up to 9.2 percent from 9.1 percent in May. To put these numbers into perspective, it takes between 125,000 to 150,000 new jobs created every month just to keep up with the increase in population feeding job applicants into the workforce pool.
The paltry job creation numbers don’t exist in a vacuum. They are part of a mosaic of frustration and perhaps incompetence. A government panel of economists declared that the 2008 recession had ended over a year ago. Close to a trillion dollars in borrowed stimulus spending (much of it targeted to the public sector) were thrown against the wall to fight it. Automobile companies were bailed out with tax dollars. Banks were given essentially free capital in hopes that lending would be spurred. The Federal Reserve Board has held its lending rate to near zero and engaged in two rounds of “quantitative easing,” expanding the money supply by leaps and bounds. In spite of this huge exercise in “liquidity” the economy continues to languish and the federal debt levels are exploding.
The job creation crisis now shares center stage with the debt limit debate. They belong together. It may be too much to hope that the politicians who blew trillions of borrowed dollars fighting the most prolonged recession since the Great Depression might learn something from their failures. The lessons are there to be learned.
If you want the private sector job growth that creates wealth and expands government revenues, you don’t get it by placing a disproportionate share of stimulus dollars into the public sector. If payroll tax reductions spur consumers to save rather than spend, it is an indication that they have no confidence in the economy and the government’s handling of it. Increasing the crushing levels of government debt, spending, and borrowing does not generate that confidence. When businesses large and small keep their capital on the sideline due to uncertainty over the economy, jobs suffer and so do families.
Uncertainty is the bane of economic recovery. It is the main reason the Great Depression lasted for a decade. It is a major reason why the current economic slump continues. Business owners and investors do not create jobs when they fear factors beyond their control that could impact their profitability. Those factors abound at the moment.
A mammoth government intrusion into health care, rife with mandates and complex government regulations, sits in limbo in the courts. Businesses simply do not know at this point what the impact on their bottom lines will be if the law is upheld. The Obama administration’s energy policies are killing domestic energy jobs while driving energy prices higher for businesses and consumers. The majority of businesses in the U.S. are non-union. Obama’s appointees to the National Labor Relations Board continue to try to muscle through pro-union regulations that Congress has refused to enact. Free trade agreements sit idle in Congress, agreements that can expand American exports and create jobs.
The one element that absolutely will reduce the federal budget deficit and the national debt is a rapidly growing economy. That won’t happen as long as our national economic policies put the public sector first, continue to create uncertainty, and throw roadblocks in the path of business investment and job creation. The June employment figures are a testimony to that fact.