February 3 2012
Job Creation Engine Tries to Start - Is There Fuel?
Today the Bureau of Labor Statistics is out with the January jobs report. It's mostly good news! Unemployment is down to 8.3 percent as the economy added 243,000 jobs. Here are some imporant points from the report:
Mancession's end? Notably, the unemployment rate for adult men (7.7 percent) has declined and now matches that of adult women. Is the mancession over? A key factor for men this month is the increase in manufacturing jobs (+50,000) and construction jobs (+21,000). An unseasonably warm winter has allowed the construction industry to add 21,000 jobs this month and 31,000 last month.
This is all good news, and we can be glad that more American families are bringing home the bacon.
But not a lot of bacon. In the last 12 months, wages have increase 1.9 percent. Whew. That is measly. Compare that to the Consumer Price Index (CPI) last reported at 3 percent, and the 12-month change in the price of gas (up 9.9 percent) and food (up 4.7 percent). For most Americans, our wages can't even keep up with the things we need to buy!
For many, the disappearing raises they never got in 2011 simply went toward a different kind of compensation: health insurance - where they probably got the same coverage as years past, but now at a higher cost. Remember, the cost of employing someone does not equal their wages!
So what's next: Even if Americans aren't making as much as we'd like, we should still celebrate the growth in jobs in January. As neighbors, we are glad to see unemployment decrease because we know the stress it causes other families. As analysts, we can be glad that more employment means more production, and more taxpayers, which is all good for the country.
Politically, this month's employment report is good news for President Obama. But the growth in employment is simply happening in spite of and not because of his policies. He's signed off on two huge anti-growth pieces of legislation: ObamaCare and the Dodd-Frank financial reform bill. And he's the hold up on any meaningful tax and regulatory reform that employers consistently cite as would-be benefits to hiring. Furthermore, he's rejected a permit for the Keystone XL pipeline project, signaling that political points, not job creation, are his main priority.
We should capitalize on today's good news. The job creation engine is trying to start, we should fuel this small growth by taking public policy in the right direction.
I'll make the same suggestion I always do - that the government get out of the way - but I'm afraid it's falling on deaf ears in Washington. Any administration that sees government as the solution to our employment woes will continue to take policy in the wrong direction, to the detriment of our slowly recovering economy. We have several million more jobs to create before we get back to pre-recession employment levels.