New Jobs Report: Solid Growth Boosts the Economy (and Obama), But Problems Persist
Saturday Nov 3, 2012 10:01 am
Yesterday's report on the job market in October is good—but not stupendous—for both the economy and President Obama's political prospects. Voters tend to turn away from incumbent parties and presidents when unemployment rates are high but favor them when the job market seems to be improving.
Although the unemployment rate, at 7.9 percent, is now higher than at any election time since Franklin Roosevelt's 1936 re-election, the latest figures do show continued evidence of recovery. It's not flashy, and it's not enough, but it may provide grounds for hope—and maybe a few extra votes for Obama.
"President Obama's leadership has put our country on the road to economic recovery," AFL-CIO president Richard Trumka said in response to the report. Even business economists and stock-market buyers were enthused over the numbers, even if they were not always willing to credit Obama. The number of new jobs in October exceeded forecasts: 184,000 new private sector hirings, unfortunately reduced once again by the loss of 13,000 government jobs—in a feature of this peculiar recession largely wrought by Republican austerity policies. The result is a net creation of 171,000 jobs. But the public sector hemorrhage of the past few years has slowed in 2012, raising hopes for a real recovery.
Equally encouraging, further analysis shows that the number of jobs grew faster—by 84,000 jobs—in the past two months than previously reported, making the average gain per month recently around 170,000.
That is more than the number of jobs needed to cover growth of the labor market, variously estimated at 100,000 to 150,000 a month. Although that growth should have trimmed the unemployment rate, it rose 0.1 percent—"essentially unchanged," according to the Bureau of Labor Statistics—to 7.9 percent largely because people who had been counted as having left the labor force saw signs of hope and returned in larger numbers to look for jobs. With labor force participation rates down significantly since the start of the Great Recession, the unemployment rate may decline slowly as those discouraged workers return over the coming years.
The lingering effects of the job losses that Obama inherited with the financial crisis create both hardship for the long-term unemployed and depress economic growth and job creation because the jobless have less to spend. "Overall we're glad the job growth trend has continued," says Christine Owens, executive director of the National Employment Law Project (NELP), "but we know we need much stronger job growth."
Those problems of the unemployed and the overall economy will only get worse if Congress fails to renew its temporary emergency unemployment insurance program, which expires at the end of the year. Since it was first approved in July 2008, providing up to 99 weeks of unemployment insurance (counting the standard 26 weeks of state coverage), the legislation has been a captive of political bargaining—or Republican blackmail—winning renewal ten times, often after lapsing temporarily, at times for only brief periods.
If it is not renewed, NELP calculates that 2 million long-term unemployed will lose benefits in December, nearly another million in the first three months of next year.
Overall, roughly 5 million workers have been unemployed over six months, and the average job loser is out of work 40 weeks. But many states have not only set stricter standards on who is eligible for unemployment insurance, and many of those who were eligible have exhausted benefits but still can not find a job. Only about 46 percent of the currently unemployed receive any benefits (and the share getting assistance goes as low as 16 percent in Florida).
The need for the extended federal benefits for long-term unemployed—and much more—remains, despite the strengthening job market. If the federal program is not extended, Owens says, "it harms these folks, and sucks income out of the economy."
The gains and losses continue to vary greatly by sector. Construction work suffered the greatest losses in the recession, and despite some hints of improvement, employment continues to be stuck in the pits.
That is one reason why white men have suffered in this downturn, although now they are disproportionately scoring gains. That improvement may owe something to modest improvements in manufacturing and high percentage growth (yet few jobs in absolute numbers) in mining and logging, reflecting the natural gas boom. But education and health have grown steadily even during the worst of the downturn, now joined by upticks in employment in leisure, professional services, and trade and transport.
But real incomes continue to decline overall, despite improvements in the job market—except for the very rich, who have managed to capture nearly all the increase in personal income since the recession officially ended.
T HE EMPLOYMENT SITUATION — O CTOBER 2012