The Bureau of Labor Statistics reports the creation of 169,000 net new jobs with the unemployment rate “little changed” at 7.3 percent. However mediocre, these figures are likely to reconfirm the Federal Reserve’s inclination to begin “tapering” back the $85 billion it is pumping into the economy each month. The Congress is headed into a debate on how much and what to cut in federal spending. These are steps that reinforce the notion that the economy has returned to normal.
But this new normal is neither normal nor acceptable. More than 21 million people remain in need of full-time work. The percentage of people in the labor force – the labor force participation rate – was down to 63.2 percent for the month. Before the Great Recession, it averaged about 66 percent. While some of that is due to boomers retiring, the difference largely represents millions who have lost hope in this economy. Worse, the jobs numbers reported for June and July were adjusted downward.
The jobs that are being created remain worse than those that were lost. Manufacturing added 14,000 jobs in the month, with levels remaining below what they were a year ago. The president’s modest goal of creating a million new manufacturing jobs in his last term remains a distant dream. The number of long-term unemployed remained at 4.3 million, a haunting 37.9 percent of the unemployed.
The fact is this economy has not recovered from the Great Recession. It still is in dire need of jobs and greater growth. As Paul Krugman states, some $2 trillion has been lost in economic activity in order to keep our debt-to-GDP ratio a handful of points lower. This is remarkable folly.
Instead of continuing its failed austerity-lite policies, Congress should be moving to a jobs agenda, making the investments we cannot avoid – in rebuilding our decrepit infrastructure, putting teachers and police back to work, and in renewable energy and energy efficiency – that will help put people back to work. With the Federal Reserve likely to begin cutting back its boost to the economy, the Congress should step in to boost jobs and growth, not continue to cut them.