Published September 06, 2013
Friday’s new job numbers show something workers already knew: they face a very bleak job market. Unfortunately, Americans have been facing tough times for many years now. According to the latest Gallup poll, Obama’s job approval rating on the economy stands at just 35 percent.
After over four years, this continues to be, by far, the worst recovery on record. And that goes for income as well as for job growth.
Too often the media’s gauge of whether the economy is improving rests solely on the number of jobs created or the unemployment rate. And indeed, 169,000 jobs were added in August, but what is rarely mentioned is that at the same time 204,000 more working age people were added to the workforce.
True, the unemployment rate has also fallen from its peak of 10 percent down to 7.3 percent. But that doesn't mean many new jobs. People are classified as unemployed only as long as they are actively looking for work. The unemployment rate can thus fall either because people have found jobs or because they have given up looking for work.
During the recovery, 70 percent of the drop was due to people giving up looking.
New jobs are simply not being created fast enough. Jobs have increased by 2.9 percent in the more than four years since the recovery started, but that is less than a third the job growth seen in the average recovery since 1970, and even less than a fourth the growth following other severe recessions.
And it has not been even close to keeping up with the growth in the working-age population, and the percentage of the population working has quickly fallen to a level we haven't seen since the 1970s. This number slid even further in August.
A closer look shows the picture is actually even bleaker:
Thus many are stuck with part-time jobs when they really are looking for full-time work.
There is also another problem. Over the year and a half before the recession, new hires averaged 5.25 million per month. During the recession (December 2007 to June 2009), new hires fell dramatically to 4.39 million, hitting 4.2 million per month in January 2009, when Obama became president.
But instead of hiring picking up as it normally would in a recovery, it has averaged just 4.1 million per month.
The latest data, for the last three months, have shown some improvement to 4.35 million -- but the number is still slightly below the average during the recession.
So how can we be gaining jobs when fewer new people are being hired? Many are simply staying in the jobs they already have.
A drop in total job separations can be a good thing -- if, for example, the cause is a decline in layoffs. But that's not the case. Rather, there's been a serious drop in workers quitting -- most likely because they fear not being able to get a new job.
One million fewer Americans a month are quitting than during the couple of years before the recession.
Quits aren't supposed to be falling during a recovery. During a recession, sure: With poor prospects of landing a good new job quickly, people hesitate to voluntarily leave.
Yet, the opposite is supposed to happen in a recovery: People sense opportunity, and they chase it. The rebound is supposed to be especially strong after longer recessions, as people who've been putting off quitting finally decide it's safe to bite the bullet.
While those who have jobs have hunkered down and held on to their jobs, the lack of new jobs has really hit young people who are entering the workforce. Obviously, they don't have the option to simply keep the jobs they already have.
If economic research is right, there are long-run consequences to a bad start in the job market. These young people's entire careers are going to be impacted by this early unemployment.
Other developed countries, such as Canada and even the European Union, have created jobs at a faster rate than America. And the countries in Europe that have most restrained government spending and borrowing (Germany, Sweden, Hungary, and Switzerland) have done by far the best.
The president keeps speaking as if he has no responsibility for what is happening. But for the first two years of his administration, he enjoyed massive super-majorities in Congress and got everything that he wanted passed, including five very expensive "jobs" bills.
We didn’t even start adding net jobs during the “recovery” until after the stimulus had run out of money to spend. The resources the government spends had to come out of someone else’s pocket.
ObamaCare has also created its problems. The media has been filled with stories of firms turning full-time workers into part-time ones in order to avoid ObamaCare penalties.
Americans have been extremely patient with President Obama’s policies. But recent surveys show that even most Democrats don't believe Obama is offering new ideas to finally get the economy going. Hopefully, the president will learn that his economic policies are failing before another Labor Day goes by.