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The jobs numbers and uncertainty

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For the past few months, the GOP has been arguing that the jobs numbers are grim because of the policy uncertainty caused by Barack Obama's radical legislative agenda. So, do today's numbers provide support for that?

Well, no. The private sector added almost 70,000 jobs. Now, it's possible that they would have added more new jobs in the absence of the Obama agenda. But then you look at where the jobs came from: The largest gains were in the health-care sector, where 28,000 jobs came online. Health-care reform doesn't appear to be scaring that industry out of hiring, which is as you'd expect, as the bill makes demand for the services more, rather than less, likely.

This doesn't decisively prove that policy uncertainty isn't a problem -- you can't prove a negative -- but it's more evidence that it's hard to find evidence for the argument. Meanwhile, the economy as a whole actually lost jobs, as 114,000 Census positions expired and 6,000 other government workers were let go atop that. There's no uncertainty about what's happening there -- strapped state governments are cutting back -- and there doesn't appear to be much interest in addressing the problem.

So on the one hand, we're having a debate about what to do about private-sector jobs that's totally disconnected from the evidence. On the other hand, we're largely ignoring public-sector job losses, perhaps because it's obvious what we should do about that but Congress doesn't have the votes or the energy to do it.

By Ezra Klein  |  September 3, 2010; 5:30 PM ET
 
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Comments

What does not having the energy mean? Is it one of those vague concepts like "political capital" that don't really mean much?

Saying it's not a priority for insane political reasons, eg, Republicans casting is as another bailout for the _____'s union!! Makes more sense to me.

Saying they don't have the energy makes me think of the end of the world.

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"So take a nap... ZEN FIRE ZE MISSILES!"

Posted by: will12 | September 3, 2010 7:07 PM | Report abuse

Ezra,

Could you please add the stimulus to this graph as well, so we can see clearly how the stimulus worked and then ran out of steam because it was too small.

This graph is great to show that the bleeding stops but adding the stimulus will show directly WHY the employment turned around and will show that running out of stimulus is why there employment has essentially quit growing.

Posted by: grooft | September 3, 2010 9:03 PM | Report abuse

You don't need to believe the GOP to find evidence that regulatory aggressiveness and uncertainty is creating job growth. All you need to do is hang out with people who create jobs. One concrete example: I know personally of several medical device companies that have shelved new product launches because of the Obama FDA's new more stringent requirements for 510(k)s, or decided to launch those products only in Europe. Each of those decisions has cost specific jobs (or prevented the creation of new ones) in the United States. The electric power industry is specifically under-investing now because of regulatory uncertainty around the future of hydrocarbons. The offshore drilling moratorium. And so it goes. And that does not even touch small business, which creates most of the jobs. The successful small businesses that hire lots of people tend to be owned by individual taxpayers. They don't even know what their tax rates will be next year, much less for the long term. Few people get aggressive with expansion plans under such conditions. Sure, lack of aggregate demand is also a problem, and unlike the Tea Party folks I supported a stimulus program (although I thought there were big problems with the one enacted), but the constant stream of new regulation in almost every industry is pulling hard in the opposite direction.

Posted by: TigerHawk | September 4, 2010 6:54 AM | Report abuse

Geez, Ezra. Instead of talking to academics and pundits, try talking to actual people in the private sector. I think you will find that regulatory uncertainty is indeed real and it is hindering new hiring.

Posted by: sold2u | September 4, 2010 10:36 AM | Report abuse

Let's see - fiat that 32M must be given free health care - or be forced to buy it - then check and see if the health care industry is hiring.

Maybe if we force everyone to buy a car every two years from GM or Chrysler we can see how it affects the auto union.

Ezra, shut up.

Posted by: in2liberty | September 4, 2010 11:10 PM | Report abuse

in2liberty puts it in a jerkey way but he/she is actually right. Don't you find the increase in health care jobs to be disturbing rather then elating? There's ample reason to suspect that they're creatures (either directly or indirectly) of the public sector.

The argument for HCR was that it would at once increase coverage and control costs. If there's an increase in hiring in that sector doesn't it make one suspicious that we're doing the former and the expense of the later? I suppose the real question is just how much bang for each new hire we're getting - perhaps these new hires are very productive but I've seen no evidence for that.

Posted by: cooreilly | September 5, 2010 6:44 AM | Report abuse

@cooreilly -- I suspect the increase in health care employment (which I suspect relates to health care services, not employment at pharma or med tech companies) is probably, in part, a reflection of the inelasticity of health care benefits. Yes, Obamacare is supposed to address this, but most of it has not kicked in yet.

That said, the regulatory and tax certainty issues are real, whether or not they also happen to be GOP talking points. They have specific impact (such as the cancellation of new medical devices mentioned in my comment above), but the diffuse impact is greater. People make new investments, take new risks, and so forth, often because they are excited to do so. They will not become excited until they think that their upside will not be taken away by a big upward revision in the income tax, new regulation from Washington, etc.

Posted by: TigerHawk | September 5, 2010 8:41 AM | Report abuse

This begs the question, why are we willing to put up with politicians who assert statements without evidence as fact?

If I were to claim that "Eric Cantor is secretly Grand Vizier of the Ku Klux Klan", that would be looked upon poorly, because it is a statement without any evidence. But there isn't evidence to the contrary either.

The consequences of discouraging attempts to improve the economy probably hurt a lot more people than insinuating that Eric Cantor is a flaming d-bag. So why do we let politicians write fiction?

Posted by: zosima | September 5, 2010 9:50 PM | Report abuse

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Posted by: kennedymichael95 | September 6, 2010 1:52 AM | Report abuse

I take exception to the statement that you cannot prove a negative. You simply need to state it as a positive, and see where it leads you.

Posted by: AMviennaVA | September 6, 2010 12:38 PM | Report abuse

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