Jobs, Wages & the Sequester

http://www.nytimes.com/2013/05/04/opinion/jobs-wages-and-the-sequester.html?hp

http://economix.blogs.nytimes.com/2013/05/03/keeping-up-not-getting-ahead/

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"I've never known anyone who said, 'I love problems,' but I've known many who have admitted that their greatest gains came in the middle of their pain." (John C. Maxwell)

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The Times Editorial Board points out that the employment report released Friday showed job growth for March revised upward to 138,000 new jobs followed by April even higher at 165,000.

So, quoting the Times: "But both tallies represent a big drop from February, which showed a healthy gain of 332,000 jobs. One interpretation is that the sequester-induced economic headwinds that began in March are hurting job growth, which might otherwise have taken off this year. Seen in that light, the April report portends elevated joblessness and low wages for at least as long as the sequester lasts, and possibly longer, depending on the extent of the economic damage from self-inflicted austerity."

Further: "At the average pace of job growth this year, it would take 5 years to return to the prerecession unemployment rate of 5%. It is doubtful that even the current pace can be sustained."

This Editorial Board note followed an article by Binyamin Appelbaum (Economix, 5/3/13), Keeping Up, Not Getting Ahead, where the perspective was that the American economy continues to add jobs in proportion to population growth: "Nothing less, nothing more."

The most important thing in Appelbaum's article is the "chart" which which shows the share of American adults with jobs has barely changed since 2010, hovering between 58.2% and 58.7%. This is roughly four percentage points lower than the employment rate before the recession, a difference of roughly 10 million jobs.

Appelbaum: "The lack of progress has been obscured by the steady decline of the high-profile unemployment rate, which continued in April. But the unemployment rate is easily misunderstood. The government counts as unemployed only those who are actively looking for new jobs. As people have given up, the unemployment rate has declined - not because more people are working, but because more people have stopped looking for work.

The federal government counts 11.7 million Americans as unemployed. The real number is more like 17 million.

If the labor force participation rate should be at (roughly) 63%, what's being done to give us confidence that there will be 10 million job opportunities out there? Government employee lay offs don't appear to be helping anything. Wait, those lay offs are saving money. But taxes from companies investing in the U.S. economy because of lowered tax rates would have paid for those jobs.

Investment, innovation and job creation seem to go together. We need to encourage whatever makes that happen!