“What I’m interested in is taking action right now to help businesses create jobs right now”. That was what President Obama had to say back in 2009, when the unemployment rate was 10.2%. And two years later, we are still waiting for ‘right now’ to happen.
The problem isn’t just that the unemployment rate is still elevated at 9.1%. The problem is that job growth has ground to a halt. There is a difference between firing and not hiring, and a lack of hiring is casting a pall over the employment picture.
Last week’s jobs report stole headlines with news that no jobs were added in August, the first time we have seen a month with net zero jobs added since World War II.
But the trend is nothing new. Job creation has been stagnating. The economy has added less than 100,000 jobs for the past four consecutive months. And we need something more like 150,000 jobs created every month if we want to see any reduction to the unemployment rate.
And with the lack of job creation, adjusted for population growth, the employment level has fallen back to the level we last saw in 1987.
That means we have lost 14 years of job growth.
There are 14 million people unemployed today (25 million if you count underemployed). More than 6 million people have been out of work for at least 27 weeks.
It’s going to take a lot to make a dent in those numbers. A lot being adding 13.7 million jobs over the next three years, according to economist Peter Morici on CNBC, which would bring the unemployment rate to 6%. That amounts to creating 381,000 jobs per month. That’s not going to happen. The unemployment rate won’t fall below 8% until 2014, according to the Congressional Budget Office. And we won’t reach full employment (which means a 5.2% jobless rate) until 2017.
This is a serious challenge for the president, because it means facing reelection with a jobless rate somewhere around 9%. And with the exception of Ronald Reagan, since World War II no president has won a reelection bid with unemployment over 6%.
President Obama will address Congress this week with his plans to reduce unemployment. But the reality is that rather than have the government manufacture jobs, we need private businesses to create them.