Today’s awful jobs report reveals that only 69,000 jobs were added in May—and revised the March and April jobs reports downwards by 49,000 jobs, meaning there was a net increase of only 20,000 jobs.
While it’s not always wise to make a big deal out of a single jobs report, there’s a clear downward trend (spiral?) happening here. December, January and February saw the addition of over 200,000 jobs. Then March dipped to 120,000 and April saw 115,000 (pre-revision), and now we’ve sunk down even further—69,000 new jobs doesn’t even keep pace with population growth. Whatever sluggish recovery may have been underway seems to have stalled out.
Like every other recent jobs report, we saw the public sector shedding jobs—13,000 last month. The only real growth was in service-sector jobs; everywhere else was flat or fell. Construction lost 28,000 jobs, accounting services lost 13,000, and the leisure and hospitality sector lost 9,000. There were 95,000 new jobs for women and 26,000 fewer jobs for men.
As you’ll inevitably hear all day, this is terrible news for Barack Obama and good news for Mitt Romney. But the real political story here is how terribly Washington is responding to this jobs crisis, to the extent it is at all.
Firstly, the Federal Reserve Board of Governors is charged with macroeconomic stabilization, with a specific mandate to fix unemployment. It has done next to nothing in recent months, though the addition of two governors after a Senate stalemate was broken might, maybe make things move faster.
Next, the government could and should take advantage of ridiculously low lending rates to borrow money and goose the economy through infrastructure spending, direct hiring of workers, aid to state governments, and so on. But austerity-driven Republicans and timid Democrats make this unforeseeable, as Felix Salmon describes:
The 2012 election should be a referendum between two visions of America. On the left, Obama should say that we’re in a jobs crisis, and that he’s going to do everything in his power to get people back to work—by employing them directly, if need be. On the right, Romney can say that job creation should be left to US companies, despite the fact that those companies are signally failing to increase their payrolls despite their record-high profits. And then the public can choose which side they want to vote for.
Sadly, the lines won’t be drawn nearly that cleanly: Obama is bizarrely reluctant to talk about anything which rhymes with “stimulus”. As a result, the current dysfunction—and horribly weak jobs market—is likely to persist for far too long.
Finally, if the government isn’t going to help the unemployed, it should at least resist screwing them even harder. But alas, because of a deal Congress reached in February, by the end of June, unemployed workers in twenty-four states will no longer be eligible for benefits under the Emergency Unemployment Compensation program. By the end of August, the federal-state Extended Benefits program will expire in thirty-five states, which will effectively end benefits for over 500,000 workers.
In short, it’s as clear as ever that not only does the United States have a jobs crisis on its hands but a dismal political crisis as well.
For another take on the jobs report, read Bryce Covert's Jobs Report Shows How Romneynomics Would Hurt the Recovery.