Econosphere: Obama's unemployment problem
By Dylan Matthews
The Obama administration's inability to lower the unemployment rate is renewing concerns about a stalled recovery. The House is scrambling this week to pass a $26 billion bill to prevent tens of thousands of teachers and state and government workers from being laid off and on Friday the Labor Department said 181,000 workers dropped out of the labor force in July leaving the unemployment rate unchanged at 9.5 percent. Econonomists and economic commentators weigh in on the unemployment problem.
Daniel Indiviglio wonders whether the jobs report will spur more action from the Fed:
There's some doubt about how much the Fed's likely method of action would help anyway, considering the economy's current troubles. If anything, there's some possibility the Fed could ramp back up asset purchases, reinvesting the cash from its maturing assets. In fact, the Fed did effectively tighten monetary policy earlier this year through its inaction when it ended it programs to purchase residential and commercial mortgage-backed securities, as well as other asset-backed securities. But what would be the point of starting those efforts back up?
Mark Thoma believes we need job growth well above what we're seeing now:
We need 100,000-150,000 jobs per month just to keep up with population growth, and even more than that if we want to make up for past losses. That is, we need faster growth than 100,000-150,000 per month if we want the economy to do more than just keep up with population growth and reemploy the millions and millions of people who are now out of work. So job growth of 71,000 still represents a declining labor market, and does nothing to offset past losses.
Dave Weigel thinks John Boehner should be celebrating:
Last year, a smart Republican strategist in California told me that the economy needed to be turning around, in a way that voters could appreciate, by April 2010 in order for it to help the Democrats run on recovery. That didn't happen. There might have been some hope for the Democrats if the new BLS report, one of only three before voters go to the polls, had been positive. Oh, well.
Ryan Avent highlights some good news in the report:
Hours worked and earnings ticked upward for the month. Both the mean and median duration of unemployment declined, as did the number of long-term unemployed. Of course, some of that shift is likely due to the exit of long-term unemployed workers from the labour force. The labour force shrank by 181,000 workers in July, and both the participation rate and the employment-population ratio edged down slightly. And meanwhile, the June payroll figure was revised from a loss of 125,000 jobs to a decline of 221,000 jobs.
Ezra Klein disputes the public/private distinctions commentators are drawing:
At the end of the day, jobs are jobs. When people lose a job in the public sector, they become unemployed. And if we don't step in and get more help to the states, we're going to see hundreds of thousands of public-sector employees find that out. But so far as real recovery goes, that's going to have to come from the private sector, and it's notable that they've added jobs for the past seven months straight.
Monica Potts focuses on the long-term jobless:
Perhaps most depressingly, the number of people who've been jobless for more than 27 weeks remains virtually the same at 6.6 million, and the number of workers who've seen their hours reduced because of the recession has changed little and is at 8.5 million, underscoring the need for continued support from government programs. Another unfortunate statistic that remains steady are workers discouraged by the economic climate. Those who have looked for a job in the past 12 months but not in the past 4 weeks number 2.6 million, and there are 1.2 million discouraged workers. The latter number is up by 389,000 from a year ago.
Megan McArdle raises doubts that more stimulus would help:
Government jobs at the state and local level clearly got bloated during the long boom, and we can't just keep pumping money into these economies forever while we wait for a recovery. Japan's experience with government-supported employment does not suggest great things--the government can ease some of the pain, but it can also end up with a terrifying debt-to-GDP ratio and no lasting recovery to help work off the debt.
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