Zachary Karabell: Unemployment Report: Why Job Growth Is Stalling

July 6th, 2012

The Daily Beast
By Zachary Karabell
July 6, 2012

Today’s jobs report, released to a sweltering nation, will do nothing to dispel the political heat. According to numbers compiled by the Bureau of Labor Statistics, job growth remained stubbornly anemic, with 80,000 new jobs added in June. The May report was revised slightly upward, and the April report slightly downward, so that the average job growth of the past three months is exactly 75,000. And the unemployment rate stayed precisely where it has been, at 8.2 percent.

The basic takeaway here (and everyone wants a takeaway) is that we have a structural change that has left nearly 6 million people unemployed for more than six months and some multiple of that so permanently unemployed that they have dropped out of the workforce. Absent massive infrastructure spending, we also have a slower-growth, mature economy with a broken government. In short, this is our new normal; expect that to change only after many years, not months.

There is also the needed caveat: these are statistics, based on surveys and massaged by formulas. They accurately capture the momentum, but not the precise number of real bodies in motion. They are also, with each passing month in an election, political football. The actual release each month totals 40 single-spaced pages and numerous tables breaking the numbers down by age, sex, race, educational level, and duration of unemployment. In the political arena of 10-second sound bites, chart 5a and the footnote on page 27 don’t exist. Yet it is in the details of these reports that something meaningful can be found, not in the rather abstract yet sanctified headline numbers of jobs created or lost or the newly totemic unemployment rate, which until the later part of the 20th century didn’t even exist.

As to the meat of these reports, what they show over the past six months is that we have entered a realm of stasis. The labor market, once you factor in demographic growth, is essentially static. That makes these recent reports Rorschach tests. If you believe, by temperament or by placement in the economy, that things are decent and getting better, you can use these reports as additional evidence. There has been steady improvement in manufacturing jobs and health-care jobs. Some areas of the country are doing extremely well—agricultural centers like Kansas and Nebraska, mixed economies such as Texas (which also has among the higher poverty rates), even rustbelt Ohio. Meanwhile—and you would think that Republicans would be celebrating this fact—government at all levels has been shedding jobs, nearly half a million since Obama was elected. Hardly the massive growth of government that keeps so many up at night.

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