Even with today’s positive job report, we have a long way to go to repair the damage done by the 2008 recession and the slow growth that followed. (Chart by Economic Policy Institute)
There was surprisingly positive news in today’s Labor Department jobs report, with 271,000 jobs created in October, an unemployment rate at 5 percent, and previous month revisions that added 12,000 jobs to previous totals.
Even the wage growth numbers, disturbing in previous jobs reports, were more encouraging, with hourly earnings increasing by an annual average of 2.5 percent year over year.
Lurking behind these numbers, however, is the real danger that the Federal Reserve will join congressional Republicans in putting brakes on economic growth just as the benefits of that growth are beginning to reach down to the workers and unemployed people still left behind since the 2008 recession.
Federal Reserve chairman Janet Yellen may read today’s report as confirmation that it’s time to end the extraordinary zero interest rates that have been the key enabler of economic growth and job creation. The constraints on federal government spending imposed by congressional Republicans, meanwhile, has been a brake on that growth.
(Paul Krugman underscores that point in his Friday New York Times column: “Specifically, it now looks as if austerity policies didn’t just impose short-term losses of jobs and output, but they also crippled long-run growth,” he wrote, citing research papers co-written by Lawrence Summers, an economic adviser to the Clinton and Obama administrations. “Even countries that seem to have largely recovered from the [2008] crisis, like the United States, are far poorer than precrisis projections suggested they would be at this point. … [and] the downgrading of nations’ long-run prospects is strongly correlated with the amount of austerity they imposed.”)
The Fed should continue to proceed with extreme caution. Many economists say that a 5 percent unemployment rate is a measure of full employment, but in the real world 5 percent national unemployment means more than 9 percent unemployment among African Americans, more than 6 percent among Latinos, and more than 9 percent unemployment among people between the ages of 20 and 24.
On Thursday Elise Gould at the Economic Policy Institute warned that the pace of job growth in the past few months has only been fast enough to “pretty much just keep up with population growth” but not fast enough to finish healing the damage done by the 2008 recession. “At this recent slower rate of growth, a full jobs recovery is still almost two and a half years away,” she wrote.
She concluded: “For the labor market to be truly expansionary, we need to see faster job growth—to employ the new labor market entrants, unemployed workers, and the 4 million missing workers who have left or never entered the labor market because of weak job opportunities.”
In order words, we need several months that meet or exceed the job growth we experienced in October.
But the Republican-controlled Congress has continued to have its foot on the brakes of economic growth by refusing to allow investment in job-creating programs and projects that the nation needs.
Even this week’s passage of a transportation bill in the House of Representatives – which paves the way for the first six-year spending plan for such infrastructure projects in more than a decade – exemplifies how congressional Republicans remain the chief barrier to economic growth that lifts the fortunes of working-class people.
That bill would authorize $340 billion in spending over six years. Adjusted for inflation, that’s actually slightly less than the inadequate $286.4 billion bill that President Bush signed into law in 2005. We have more people, more traffic, significant changes in commuting patterns and more deficiencies to fix. That’s why the Obama administration proposed a $478 billion spending plan, and Sen. Bernie Sanders has proposed $1 trillion – the amount that comes closest to what the American Society of Civil Engineers says we should be spending at the federal level on our infrastructure needs.
It’s a missed opportunity. Even with today’s relatively positive jobs numbers, it is too soon to declare victory. There are too many pockets of high unemployment – not just affecting people of color in urban areas but in rural, majority white counties as well. Unemployment in the construction industry, an area that would benefit directly from increased infrastructure investment, remains above 6 percent. It is still important to indict the conservatives in Congress for holding back the investments we need for growth, and to present a compelling vision of how we can do much better.
