Latest jobs report shows why Congress needs to get into the game
The U.S. economy added 156,000 new jobs in September, slightly below the 172,000 expected by economists in a Bloomberg survey and lower than the 167,000 in August, according to the Bureau of Labor Statistics. While the latest data signal that the economy is continuing to strengthen – though perhaps not enough to simplify Federal Reserve Chair Janet Yellen’s case for raising rates this year – the numbers also reveal signs of weakness.
Why policy action is needed
Christian Weller, University of Massachusetts Boston
For years now, the policy lesson drawn from repeatedly modest employment reports has been the same. Policymakers, especially Congress, need to do more to boost economic and job growth. The Fed has done its job by keeping interest rates low and stabilizing the economy in the aftermath of the Great Recession. The next president will need to lead, and Congress needs to act on job-promoting policies.
The latest job numbers, while positive, only underscore this message.
September’s gains marked the 72nd month in a row that the U.S. has added jobs – the longest running streak since World War II. Unemployment – now at 5 percent – has been at or below that level for a consecutive 12 months for the first time in more than eight years.
What’s more, people have more money in their wallets. Wages grew by 2.6 percent from last September. With inflation hovering below one percent, people’s buying power keeps going up – a welcome change from the first five years after the Great Recession.
Despite this good and welcome news, more work needs to be done. Employment growth has averaged 1.4 percent per year since the Great Recession ended in 2009, well below the long-term average of 1.9 percent from the end of World War II through 2007.
Given this middling jobs growth, many people have given up looking for work or could only find part-time jobs, when they wanted to work full-time. About as many people – 7.7 million – fell into these categories – as reported being unemployed – 7.9 million – in September.
It’s no surprise then that the share of people in their prime earnings years – age 25 to 54 – that were employed stood at only 78 percent, still below the 79.7 percent reported in December 2007. Put differently, there would be an additional 2.1 million people working in this age group if the employed share were the same as it was at the start of the Great Recession.
Finally, the pain of unemployment is unevenly distributed. The African-American unemployment rate was 8.3 percent in September, compared with 6.4 percent for Hispanics and 4.4 percent for whites.
As American families continue to struggle, it is high time for policymakers to get into action. More and better jobs will not materialize by themselves. Businesses are profitable, but they are just not hiring fast enough. Policymakers have to step in, for instance, by promoting and enacting much needed infrastructure investments to kick up job growth to a faster level.
Job numbers are cause for worry
Thomas Kochan, MIT Sloan School of Management
September’s numbers follow an equally sluggish 167,000 in August, suggesting there is cause to worry that the economy is slowing down.
This is especially frustrating given that we still have yet to close the jobs gap – the difference between how many jobs have been created since the Great Recession and how many were lost during the crisis coupled with how many new workers have entered the labor force since then. If the rate of growth over the past two months continues, it will take almost another year before the job gap is finally closed.
Labor force participation, long-term unemployment and the number of people working part-time but wanting full time jobs also all remain stuck at high levels for this stage of the “recovery.” Each month these features persist more young people will not find career jobs, and the long-term unemployed and those who have given up looking for work will remain discouraged and frustrated.
The two bright spots in this month’s numbers are that the economy produced 67,000 new jobs in professional and business services – occupations that command above average wages – and that overall wage growth remains healthy, averaging 2.6 percent over the past 12 months. But other good-paying industries like construction and manufacturing showed no growth.
Taken together, these numbers suggest the next president and Congress will need to get to work immediately on their proposals to invest in infrastructure and other high potential job creation initiatives if they are to deliver on their promises to produce the job growth needed to heal the economy and make it work for all.