Not enough jobs? Blame the government

September 10, 2012

The U.S. labor market has been adding jobs for two-and-a-half years, helping bring down the jobless rate from a peak of 10 percent in late 2009 to the current 8.1 percent rate. But recently, job growth has slowed to under 100,000 per month – not enough to keep the jobless rate on a downward path. Heidi Shierholz at the liberal Economic Policy Institute in Washington says this leaves the U.S. economy well short of achieving its full capacity:

We’d need to add around 350,000 jobs a month to get back to the pre-recession unemployment rate in three years.

With just 96,000 jobs created in August, we’re still a long way off from that kind of strength – and a steady flow of job losses from the public sector isn’t helping. State and local governments have been slashing public payrolls to balance their budgets. In August, the public sector lost 7,000 jobs, but that was mere drop in the bucket of public sector job losses that now total 680,000 lost jobs since August 2008. The total impact is even larger, says Shierholz.

Through ripple effects, the loss of public-sector jobs also causes job loss in the private sector, amplifying the drain on the recovery.

The anemic job growth of the last two-and-a-half years has left the labor market with a deficit of 9.8 million jobs, she said.

The lack of demand for workers means unemployment durations remain extremely high. If emergency unemployment compensation (EUC) benefits are allowed to lapse (as is currently scheduled to happen at the end of this year), only around a quarter of all unemployed workers would be receiving unemployment insurance benefits, the lowest share on record. Given the weakness of the labor market, this would … likely cost about 430,000 jobs. Continuing emergency unemployment insurance benefits should be part of the continuing appropriations legislation that congressional leaders are currently negotiating.

4 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/

I saw a report over the weekend that said corporations were sitting on 300 billion to be used for growth but were waiting for the results of the presidential election. Maybe that’s how the Government is to blame???

Posted by StevierayFan | Report as abusive

The jobs numbers are how many new people were added to payroll employment, not how many jobs were created. It’s a common misstatement repeated in the media. In actuality, millions of skilled labor jobs go unfilled–3.8 million as of July 2012 (see http://www.bls.gov/jlt/). To solve unemployment and put people back to work in the USA we have two choices: create low paying unskilled jobs that match low skilled unemployed persons OR help the unemployed obtain the skills to get hired into the UNFILLED 3.8 million skilled jobs that pay salaries capable of raising a middle class family. The media should focus its support onto helping the unemployed match up with these 3.8 million unfilled higher paying jobs, thus bringing more spending $ into American households; this is the best way to grow the US economy . . . a strategy of dumbing-down the types of jobs created to simply meet the needs of the unskilled unemployed is not in the best economic interest of our country if it leads to perpetuating products and services where market demand is shrinking. We should base job creation strategy where there is growing market demand and seek to out-compete by providing the best quality at the lowest cost (monetarily, environmentally and socially). It would be smarter to focus American workers toward obtaining the skills to do these 3.8 million 21st-Century jobs that are already created in the U.S., but which sadly go unfilled because there aren’t enough workers with the necessary skills, knowledge and abilities.

Posted by chrisyh1 | Report as abusive

and you can trust the Economic Policy Institute, they are totally unbiased as we all know! NOT!

Posted by Cranios | Report as abusive

Would this be a shameful place to make a plug about pensions?
We are laying off public sector workers because the pensions are taking up so much of the general budget.
Yet the public workers don’t want to reduce their pensions.
It’s a nice viscous cycle.

Posted by xxavatarxx | Report as abusive