Time’s running out for job growth

By Felix Salmon
October 8, 2010
September payrolls report.

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

There’s absolutely nothing to get excited about in the September payrolls report. America has substantially fewer jobs than it did a month ago, in what is meant to be a growing economy. Even the uptick in private-sector employment (+64,000) is pretty pathetic: it’s not enough even to keep up with population growth, let alone to make a dent in the unemployment rate, which stays at 9.6%.

Meanwhile, as the school year begins, we have this:

Employment in local government decreased by 76,000 in September with job losses in both education and noneducation.

As states and municipalities around the nation start running out of money, they’re going to fire people; this is only the beginning. And if October is any indication, the job losses in the local government sector are going to be at least as big as the job gains in the private sector. No wonder the number of discouraged workers is up a whopping 71 percent even from the grim days of September 2009:

Among the marginally attached, there were 1.2 million discouraged workers in September, an increase of 503,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

The U.S. does not have the luxury of waiting indefinitely for job growth to resume. Already we’re at the absolute limit: any longer, and most of the unemployed will be long-term unemployed and, to a first approximation, unemployable. This country simply can’t afford an unemployable underclass of the long-term unemployed — not morally, not economically, and not fiscally, either.

29 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

The tax incentives should encourage job creation. As I work with clients to help them transition from unemployment to owning their own business – either buying a franchise or licensed business or even creating their own business, I see people empowered who are creating jobs for themselves and others in the community. For example, one of my clients within 60 days of opening his franchise was employing 5 people in the community. Job creation should be a priority for states since it through business growth that the state’s income can increase.

Posted by BizCoach | Report as abusive

Felix: Your hero Obama will be smacked, hard, and deservedly so, by the voters in November. At that point the uncertainty generated by a radical anti-business, pro-government agenda pursued by the Democrats will come to an end or, at the very least, moderate significantly. Watch for it; Corporate America is sitting on literally trillions in cash. When they start spending, this whole thing will turn right around. And your hero Obama won’t be able to claim credit before the voters finally kick him and his ilk out of the White House two years hence.

Posted by Gotthardbahn | Report as abusive

Given the level of indebtedness of both individuals and governments, I cannot see how either have the capacity to invest in the creation of new businesses. One can only borrow from one’s future for so long. This is the root of the problem I think.

Posted by nfilipovich | Report as abusive

I agree, Felix, but the government pouring yet a couple trillion dollars of borrowed money into this economy is going to make things much worse.
It took decades to get to the present situation, and anyone who believes, or says there’s a quick fix is not serious.

Posted by yr2009 | Report as abusive

Where’s the mention of the Republican refusal to reauthorize the stimulus package that created 240,000 jobs?

http://www.huffingtonpost.com/terrance-h eath/conservatives-just-killed_b_747800. html

Posted by Luno | Report as abusive

Yeah, sure, the Republican mantra: it’s all Obama’s fault. It’s so ignorant, repugnant and scary at the same time. I’d love to have everyone just raise their hand: those in favor of Obama move to the east, those not, move to the west. We will never get along anyway. Goodbye and good riddance.

I’m so sick of Democrats cleaning up the Republican mess, only to be blamed for the state of the country. It’s typical and yet still shocking.

Posted by jonbonanno | Report as abusive

Gotthardbahn:
You show your cluelessness. How has Obama been anti-business? Is Jamie Dimon or Lloyd Blankfein in jail? Was EFCA ever passed? It’s demand, stupid. Or do you just enjoy parroting crap you hear from Hannity and Beck?

Posted by PhilPerspective | Report as abusive

Dear PhilPerspective:

Yes.

Sincerely,

Gotthardbahn

Actually, Gotthardbahn has stumbled onto some truth here. Businesses are sitting on trillions in cash, so much so that they are investing in their own companies to boost stock prices rather than hire new employees. Why are they doing this when hiring and investing in communities could help the country? Could the hundreds of millions of dollars in contributions coming from the Chamber of Commerce (and it’s foreign members) have anything to do with it? I wouldn’t be surprised to see these companies begin hiring if the republicans take over, thereby creating a political win for them.

Posted by hatcher | Report as abusive

I wasn’t exactly clear:

The CoC is contributing to republicans almost exclusively, so it stands to reason that it would encourage its members to hold back on hiring while the democrats are in power.

Posted by hatcher | Report as abusive

Give the dems enough seats in congress and they will fix things. Taser the fillibusters

Posted by diddums | Report as abusive

Gotthardbahn: “Watch for it; Corporate America is sitting on literally trillions in cash. When they start spending, this whole thing will turn right around.” If true, then “Corporate America” actively causing suffering for millions of Americans and long-term damage to the economy. As such, it is hard to see “Corporate America” as anything but enemies of the American people, particularly because, as you imply, they are withholding their trillions to affect the outcome of November’s elections. Given this, I can’t think of a single reason why we shouldn’t declare companies constituting “Corporate America” to be economic terrorists, and confiscate those trillions. Somebody else can put that money to much better, more productive, and pro-American uses.

Posted by DavyJones | Report as abusive

It’s baked in the shtrudel.

Nothing short of something *bigger* than WWII will unbeach this rotting hulk. You know it, we know it — but what is that something bigger? Whatever it is, it looms. Kruggy thinks we have a “steel-railed future” ahead of us.

Posted by Uncle_Billy | Report as abusive

In looking for alternates, Perhaps a microcosm has presented. For all of you who think mankind needs the motivation of “MONEY “ to be capable, curious, busy and creative, may I suggest you confront the creative logic that the new movie “The Social Network” portrays. This is important, since it clearly shows that people can design very sophisticated, social systems that have no need for money incentives, but rather all the nuances of NATURE, and her resources. In fact we are damn good at it. It was a girlfriend guys, just a girlfriend.
A “job for money” was absolutely, not required. I know that comes off as an absurd statement. Fact is, our current situation is the thing that is really absurd. Once we fully realize that our possibilities are far, far, beyond the restrictions the monetary, system we can fixate on the fact that, we need to be free. It was not until money became everything, that the social fabric of this brilliant young man, started to unravel. We do not have an evolutionary reason to go up against the mathematical construct of an malignant exponential algorithm. Financial decision making is not our strong suit. So forget about it; we must set it aside. It has has always proven to get in the way and interfere with our relationship with nature.
We have this overwhelming feeling that we are in the driver’s seat and in control; nothing could be further from the truth, if we stick with a monetary system. Our intuition fools us all the time.

Posted by evolutis | Report as abusive

Guys

Don’t you guys think the current US policies like tax credits and other protective measures are turning US in to the likes of China or former Russia ?. What happened to all the creative and entrepreneurial citizens ?, Why live in fear when there is abundance around the world for those willing entrepreneurs ?.

Posted by Ignesius | Report as abusive

Make something useful and I will buy it. Say something smart and I will listen. Until then I have to agree with uncle_billy. When will the disaster hit that brings all things back to reality. It’s going to hurt but it is the only way for big changes to come. Maybe we should just stop buying anything but the necessities and see what happens. That would be a disaster now wouldn’t it? Instead of going to big retail and buying a new chair built by some poor guy that is payed pennies a day find a neighbor to build you one.
If you really think your arguments about who is to blame and who will fix it is change , you have your head in the sand. Which leaves something else high in the air and ready for abuse.

Posted by ThePup | Report as abusive

Gotthardbahn wrote: “Corporate America is sitting on literally trillions in cash”

Wow, those guys must have office ceilings 100′ tall to be sitting on such a large quantity of actual cash!

Gotthardbahn wrote: “When they start spending, this whole thing will turn right around”

Rubbish! Multinational corporations — the Corporate America to which you are referring — will not spend their trillions here. They will spend it in China, India, Vietnam, and other countries. They will build factories everywhere except in the USA to earn the greatest rate of return.

Do you ever read the labels of the products you buy, especially the “Made in XXX” part?

Posted by saucymugwump | Report as abusive

DaBear wrote: “the U.S. needs to have a net gain of about 50K new jobs per month just to stay even”

Actually the figure is 127,000 jobs per month. See http://www.epi.org/analysis_and_opinion/ entry/signs_of_healing_in_the_labor_mark et_though_unemployment_remains_in_double _/.

DaBear wrote: “the originators of these failed socialist/progressive policies.”

Do you enjoy breathing clean air? If so, you need to give thanks for the Clean Air Act passed by some of the progressives you hate. If you want to learn how bad it was before the law was passed, google on “donora smog 1948″: the Wikipedia page makes for educational reading.

Do you enjoy drinking clean water? If so, you need to give thanks for the Clean Water Act passed by some of the progressives you hate. Before the passage of the law, lakes and rivers were filled with so many chemicals and solvents that they often caught fire.

Posted by saucymugwump | Report as abusive

It is amazing how many people in the US are so truting in business to pick up jobs. Corporation are greedy, all they care about is profit and they gave us the GFC. Stupid people want to go back to uncontrolled corporate growth.
Only government can print money and create jobs, they do it in EU and UK

Posted by blueshark77 | Report as abusive

This is a purposeful accidental impasse. Much suffering. I hope it is not to late to reverse. Simply put all the money is weighing down the wrong end of the boat and the captains of industry say the Titanic will never sink yet so many have already drowned.

Posted by phyvyn | Report as abusive

Credibility is ?

Posted by phyvyn | Report as abusive

Those trillions in cash the companies are sitting on will be used to gobble up other companies. Then, instead of hiring more employees, they will be laying them off. They are only interested in what looks good on paper. Nowhere in the current mindset does hiring people look like a good business move. For the last thirty years they have been looking for, and finding ways to eliminate workers from their payrolls. We need to make room for new businesses and give them an opportunity to compete with the big corporations. Not just pizza parlors, but energy, technology, bio-medical entrepreneurs.

Posted by lhathaway | Report as abusive

Schools operate on a September to June cycle. The drop in education employment is likely a one-month event rather than the tip of a larger iceberg (unless you consider multi-year trends).

The ironic part is that cutting teachers doesn’t really save the community money. When you go from 20 students in a class to 30 students in a class, the demand for private tutoring — my side business — skyrockets. You may save one teacher for every 300 students (on a five-class schedule), but if even 10% of those students seek tutoring ($3000/yr) then your gains are wiped out. Effective education is almost always more cost-efficient than ineffective education.

I’m with yr2009 on the nature of the larger problem. This was a decade in building and will be a decade (or more) in healing. We hired a ridiculous number of workers in “make-work” jobs that produce nothing. Real estate agents, mortgage brokers, bankers, and so forth. The only “need” for them was to sustain the ridiculously high activity in the housing market.

They weren’t doing anything before and they still aren’t doing anything. The only difference is that now their monthly checks come from the government.

Posted by TFF | Report as abusive

lhathaway, you are correct. Hiring people in the US at $30k a year (plus taxes, health care, and more totaling another $20k) is rarely a good business move.

Especially true since so few people in the US have useful skills worth paying a premium for. We’ve spent 30 years studying subjects that are “fun” instead of worrying about what might be “useful”. We now import the majority of our engineers, and export other jobs because of the lack of qualified candidates.

Posted by TFF | Report as abusive

This is great news for those who hate government. Yes, fire all those government workers. Too expensive (Never mind that they are consumers, too). Shut down the public schools, they’re failing anyway. If you can’t afford to send your kids to a private school, tough. You should have worked harder. It’s your own fault you could not make a better living. But everybody should be able to live on $8 an hour. It’s the only way we can compete with overseas labor (never mind that workers overseas don’t buy our goods).

Posted by Fishrl | Report as abusive

I think we are looking to a government which cannot do much of anything. The scenerio that business is sitting on piles of money is also another myth. Look at the campaign ads. Lots of smoke and mirrors, but not much hope in smoke and mirrors. Real change will come when we get leaders in government who work with the people to make real progress. We will see a small change in 2010 and a larger change in 2012 when the slugs get moved out of the state and federal governments. The whiz kids only know what they were taught in school. Barak never had to run a business and make his own living.

Posted by fred5407 | Report as abusive

“I think we are looking to a government which cannot do much of anything.”

Very true.

Real change will come when real people decide to take control of their own lives and make a real difference. Instead we have half the country looking to the government for an answer and the other half the country complaining that they’d love to make a real difference but the government won’t let them. Neither camp has any real merit.

Start by controlling what you have in front of you. Work. Work any job you can find at any wages for any number of hours. Learn. When a teacher suggests that you do something, put real time and effort into it. Don’t complain that it is too hard. Save. You are better off living like your grandparents did than trying to emulate the profligate lifestyle of Beverly Hills.

Do that for the next twenty years and you’ll see your personal situation improve.

Posted by TFF | Report as abusive

It is true that corporations are sitting on trillions of cash. Why would they spend it without increased demand? Money follows demand.
Can any of the conservatives on this thread tell me what happened to the 30% of the stimulus that when to business tax cuts? How many jobs were created? I think most, if not nearly all, went into the pockets of businesses. Even a tax cut doesn’t justify a new hire if there is no demand for goods and services.
Every new worker has to be justified. If the revenue gained doesn’t cover salary, benefits, equipment, taxes and a modest return, then businesses won’t hire. Simple as that. You don’t pay taxes unless you make money and since the tax rate is not 100% there is theoretically some incentive to hire if a profit can be made. But if you can sit on money and earn capital gains taxed at a ridiculously low rate (15%) compared to actual labor, then this may be the catbird seat in which the most fortunate amongst us can sit and call for more tax breaks for themselves.

Posted by k2isnothome | Report as abusive

This is eight months old, but it calls into question the oft-cited suggestion that corporations are hoarding cash.

http://www.zerohedge.com/article/account ing-cash-gimmicks-have-boosted-collectiv e-sp-500-cash-balance-over-150-billion-s tart-

Seems at least part of the jump in cash (billions, not trillions) comes from delaying payments to creditors and reducing inventories. The rest comes from delaying capital expenditures. In neither case is the money truly available for expansion.

Posted by TFF | Report as abusive

Let’s see! Hmmm!!!!!! The “Demos” are POURING Trillions of $$$$ into our broken economy, and naively expect “Private Industry” JOBS to be created? The ONLY sector that’s GROWING is U.S Government jobs. Our own states are either broke or almost broke! Gimme a break “Liberal-minded Guys!” Our nation’s DEBT is through-the-roof and your children will be HURTING just like mine will in attempting to pay it off! Unfortunately they’ll never be able to!!!

People are scared, they’re HURTING financially and they’re “pissed-off”! I voted for Obama to give the “Homie” a chance!!! We and others DID and he’s failed miserably!
He’s the Man in charge, he and his party NOT the Republicans!!!

Posted by Middleclassman | Report as abusive