The June jobs report from the BLS is out this morning, and the findings are not pretty. The headline number of the establishment survey is that only 80,000 net jobs were created last month, about 100k under the requisite amount to accommodate the population increase. The working-age population grew by 189k in June, according to the household survey. As such, there are now 29 thousand more unemployed than there were last month. The U6 rate also ticked up to 14.9%.
Also, the labor participation rate and population-employment ration remain near all-time lows. There are now 1.82 million more people not in the labor force now than just 12 months ago. If you go back to January 2009, the month Obama took office, that number is a whopping 5.48 million! This comes after several months of dismal jobs reports. We’ve been averaging just 75,000 new jobs over the past three months. What about minorities? According to the household survey, unemployment among blacks ticked up almost a full point to 14.4%.
It‘s hard to articulate just how terrible and ominous these numbers are for the future of our economy. Remember that just in order to break even with pre-recession levels, we need to create about 9 million jobs, at a clip of 300-500k per month. The deeper the recession, the more robust of a recovery that is needed to break even. Also, keep in mind that the population is still growing, so we must create even more jobs to accommodate that increase.
The miracle of the American economy throughout the post-WWII era is that we have recovered from every recession stronger than we were before each downturn. At this point in the Reagan recover, we were creating over 300k new jobs each month – and that was when the population was much smaller.
Take a look at this chart comparing selected employment indicators from the time Obama took office in January 2009. As you can see, the population has grown by over 8 million, yet employment has remained stagnant.
Employment Numbers June 2012 vs January 2009 (in millions)
Not in Labor Force
We are now two years passed the end of the great recession, yet we are posting dismal jobs numbers and GDP growth of less than 2%. This is endemic of a centrally planned European-style economy, not the American economy that we know. Unfortunately, Republicans are just as guilty. Their continued support for welfare, entitlements, and ant-free market policies continued to drag down the economy with more debt and market-distortions.
We will never fully recover until we enact pure free-market policies where success is not punished and failure is not subsidized.
Cross-posted from The Madison Project