U.S. jobs rout should give fiscal hawks pause

July 8, 2011

By Agnes T. Crane and Christopher Swann
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The latest U.S. jobs report should give fiscal hawks pause. With economists expecting employment to rise by a modest 100,000 in June, the piddling increase of 18,000 proved a bitter blow for a country amid the throes of an austerity debate.

Last month’s gloom was compounded by a dip in wages. And more than 250,000 people gave up the job hunt altogether. At this rate, it would take over three decades to recover the 7 million jobs lost during the recession.

At the root of the problem is the reluctance of private firms to hire, despite a strong rebound in profits since the financial crisis. The 57,000 positions they added to payrolls in June was less than half of expectations. And a fall in temporary positions and the number of hours worked may point to further weakness in the months to come.

Still the continued bleed of public sector jobs — 39,000 more last month — is also proving a powerful drag. Over the past year, constrained federal, state and local governments have dumped 659,000 jobs. That has offset more than a third of the gains by businesses small and large. This should not be lost on lawmakers in Washington, who are in full combat mode over budget deficits.

Chronic shortfalls have taken their toll. State and local authorities have already been forced to make painful cuts, including in education, to offset falling revenue and the end of Uncle Sam’s generous stimulus packages. Now it’s the federal government’s turn.

Democrats and Republicans are fiercely debating the best way to cut as much as $4 trillion from the budget over the next decade. If tax increases are off the table because of their potential to inflict further pain on the job market, deep spending cuts will be the only way to narrow the deficit gap.

Yet this solution could easily leave more Americans jobless. That makes the structure of the plan especially significant. Belt-tightening may be inevitable but should be heavily back-loaded. It became painfully apparent on Friday that the private sector isn’t ready to absorb the swelling ranks of the unemployed. The government can ill afford to make the line longer.


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Frankly, the politicians simply do not care, and are not in fear of losing re-election since the election process has been rigged. Incumbents do not lose, or must make heroic efforts to lose.

So, why should they care about voters? They only care about donors. This is what the American system has become. Government by the highest bidder.

Posted by txgadfly | Report as abusive

As the wicked witch of the west said “These things are very delicate”. I repeated read some here advocating up a 25% reduction in the size of the government. That would be insanity. Obama isn’t spending any money of any consequence. He’s tied to perhaps the worst financial catastrophe this country has ever seen. And it isn’t over yet by a long shot. I think they seriously have to look at the financial aid that we are sending around the world. We simply can’t afford it. As well as accelerating bringing troops back home from not only Iraq and Afghanistan, but from around the world. They need to find ways to cut spending that won’t impede job growth or dump thousands of more people onto the job market. Slow and steady. Getting the speculators out of the oil market and bringing down gasoline prices further would help substantially.

Posted by xyz2055 | Report as abusive

Two comments:
1. You said that “At this rate, it would take over three decades to recover the 7 million jobs lost during the recession.” Three decades from now, the U.S. population is projected to have grown by over 100 million people, adding more than 50 million to the labor force. We need to add 57 million jobs over the next three decades. Now the situation looks much more grim, doesn’t it? Perhaps we should consider cutting our rate of immigration?
2. The above assumes that the economy did, in fact, add 18,000 jobs in June. That’s what the “establishment survey” said. However, the “household survey” says that we actually lost 445,000 jobs in June, since the “employment level” component of that report fell by that amount.

Nothing will improve until the real drag on the economy is addressed – trade policy that has gutted the manufacturing sector of our economy. It’s time for the U.S. to say goodbye to the World Trade Organization and enact policy that’s in our own best interest, instead of using trade policy as a foreign aid program.

Posted by Pete_Murphy | Report as abusive

I notice that after several hours, my comment did not post. I also notice that there are no other posts either. Considering the subject of the article, that seems highly unlikely. Perhaps none of them “passed muster,” which is what I believe happened to mine, since my comments normally post nearly immediately.

I think my article was clear and to the point, that the government right now is being run by special interest groups that are intent forcing a “tax revolt” that would be incredibly detrimental to the continuing stability of this country.

Those in our government who are “aiding and abetting” these “lobbyists” are treading seriously close to committing treason against the United States, and precious little time is left to stop them, especially when no one wants to speak the truth.

Reasoning with these people, as your article (along with many others) does, is well-intentioned, but meaningless since they have lost all sense of reality. (See, particularly, the article by Felix Salmon regarding this).

This is not economics, or politics as usual. There is a serious threat to the continued stability of this nation about to occur, and you are doing nothing about it.

If I am wrong, I apologize, but I do not believe that I am mistaken in what I am saying.

Posted by Gordon2352 | Report as abusive

It is highly confusing to think of a nation becoming the victim of its own ideology. While a half of the country demagogues it as the problems, the other sees it as the source of solutions to the aching perennial troubles. Unfortunately, since human nature prefers to do nothing than otherwise, the preaching of the former half is preferred at face value. Almost all state governments are retrenching their workers in the name fiscal sanity. Creating jobs on one hand and shedding them at the other is akin to taking a step forward and two backwards. Which way America?

Posted by omoerinuro40 | Report as abusive

Why are still sending jobs to China? Apple for starters should begin building its products back in the USA. They ship all their manufacturing in China to be built cheap and sell it to US consumers for a huge mark-up. I say we start boycotting all US companies who send their products overseas for manufacturing, starting with Apple.

Posted by kahunaone | Report as abusive

You want comments but you edit it or hold it for what???

Posted by kahunaone | Report as abusive

Americans can ill afford Mr. Obama any longer.

Posted by Elektrobahn | Report as abusive