Unemployment Report: Why Job Growth Is Stalling

Only 80,000 jobs added in June? The American economy is stuck in neutral, writes Zachary Karabell, and treating the report as a political football isn’t going to help.

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.

Video screenshot

Howard Kurtz and Michelle Cottle on the political fallout of the new jobs report.

But if you believe that the economic landscape is deteriorating, these reports provide ample fodder, especially in comparison to expectations. The unemployment rate has stayed elevated for four years, longer than many people can recall. The prospects for high-school-educated males without college degrees are bleak: for them, the unemployment rate has stayed stubbornly and depressingly high, well over 10 percent. Other areas of the country, such as central California, Arizona, Florida, and centers of the housing boom and bust, are struggling mightily, as is upstate New York.

It’s often repeated these days that the monthly jobs report will be the most important factor determining the outcome of the American elections in November. Yet, the irony is that many of the states that are prospering are solidly Republican while many that are struggling are solidly Democratic. That makes the state-by-state calculus for the election different than the spin put on these reports nationally. You’d think Obama would be more popular in Nebraska than he is and that Romney and the Republicans would find traction in California for their argument that Obama inherited a bad economy and made it worse. But the reality is that most people have jobs, whether decent or not, and so the argument that the jobs reports speak to individual concerns of the majority of the voting public isn’t quite right.

What they do speak to is a host of assorted fears and anxieties and uncertainties about the economic future of the United States. We have an economy growing at 2 percent with a culture that expects twice that. America has the world’s largest economy for a few more years, and when China surpasses that, Americans will still have a per capita income four or five times larger. Yet Americans expect a never-ending future of growth. Investors demand companies increase earnings by double-digits, which they do. But in a world of low single-digit growth, that gap has to be closed by someone, and that someone is the proverbial workingman. These job numbers show that laborers are bearing the brunt.

The mismatch between what the American economy is delivering and what many people want it to deliver accounts for a large measure of the current malaise. The tens of millions who are unemployed, underemployed, or earning less than a living wage while being employed are naturally despairing, angry, frustrated, and want something done. The positive here is that the United States is not a society where there is complacency about these problems; the negative is that the United States is not a society where there is a sense of balance and equanimity about them either.

We have entered a realm of stasis.

So expect this recent installment to be used as political football “proving” that the recovery has stalled, when in fact, what has stalled long before 2008 is the 20th-century pattern of high and seemingly inevitable growth. The task for the Democrats and Obama will be to remind voters that the economic situation may not be stellar but neither is it dire, and that collectively we need to both recalibrate and refocus on attainable, sustainable growth. We need to use these jobs reports as a reminder that, yes, education is key to better employment, and that information skills are increasingly more vital than physical ones. And we need to use these jobs reports to collectively focus on the transformation of our economy as a whole rather than as partisan markers in a never-ending and destructive campaign for electoral success.