Clarity Comes November 6
12:00 AM, Oct 6, 2012 • By IRWIN M. STELZER
Friday’s jobs report might, but only might, have been the last one that will have any effect on the race to the White House. By the time the next report is published on November 2, only four days before the election, about 40 percent of all voters will have cast early or mail ballots. But the American Enterprise Institute’s Karlyn Bowman, a polling analyst, says that although we don’t really know how many undecided voters there are, “the best bet” is that about 5 percent of voters are undecided—7 percent in the key swing state of Florida. My own guess is that these Hamlets, if indeed they ever resolve their doubts and do vote, are unlikely to be among the early voters, and so just might be influenced by incoming data in the next 30 days.
Here are the facts. Total non-farm payrolls rose by 114,000 in September, with 104,000 of the new jobs added in the private sector. Previous estimates for July and August were increased by 86,000, primarily due to an upward revision in the number of government jobs added. Average hourly earnings and weekly hours worked, and the labor force participation rate all ticked up. The headline unemployment rate, computed from a separate survey of households rather than businesses, fell from 8.1 percent in August to 7.8 percent in September, prompting some conspiracy theorists, among them former GE boss Jack Welch, to claim the Labor Department cooked the books to bring the unemployment rate below that prevailing when President Obama took office, just in time for the election. Secretary of Labor Hilda Solis says she is “insulted,” as well she should be.
Now, for the spin. The Obama camp, reeling from their man’s truly dreadful performance in the first debate with Mitt Romney, says the glass is half full and filling up, slowly, but filling nevertheless. The economy Barack Obama inherited was losing 700,000 jobs a month but, thanks to the president’s financial reforms, bail out of the auto industry, stimulus package, and tough treatment of China and other unfair traders, it has added about 5.2 million jobs since the recession ended. Most important, the unemployment rate is now below 8 percent, as the president promised it would be, and that is lower than when the president inherited the economic mess created by his predecessor’s disastrous tax and deregulatory policies. So say the Obama spinners. The president himself jubilantly proclaimed, “We have come too far to turn back now.”
Mitt Romney sees the glass as more than half empty, and leaky. The five million jobs added since the end of the recession are only half of those lost since Obama was elected, despite the hugely expensive stimulus that contributed to the addition of over $5 trillion to the national debt, a 50 percent increase in four years. There are still 12.1 million unemployed workers, and 23 million either unemployed, involuntarily on short hours, or too discouraged to look for work, a consequence of the slowest recovery since WWII. Include these workers in the total and the U-6 unemployment rate (to use the technical jargon) remains stuck at 14.7 percent.
Perhaps worst of all, some 4.8 million workers have been unemployed for 27 weeks or longer—the government’s definition of long-term unemployed—their skills atrophying, their savings (if any) dwindling, and their psyches badly bruised, a job being more than a pay check. This dire situation, claims Romney, is the result of the rising health care costs to be loaded onto employers by Obamacare, the drag on business investment created by the president’s anti-business rhetoric and regulatory spree, and soaring deficits.
The Manhattan Institute’s Diana Furchtgott-Roth, who served in the George W. Bush Labor Department, and is no fan of the president, nevertheless characterizes the new report as “a very, very good employment report,” with hundreds of thousands moving into the labor force, and finding jobs. But she worries about the high U-6 unemployment rate.
Even if this “very, very good employment report” is helpful to Obama, it is not good enough to end the weakness in the labor market. That lasting improvement will only come when economic growth picks up, and a lot. Ed Lazear, the Stanford University professor who served as chairman of George W. Bush’s Council of Economic Advisers, sees the report as “nothing to write home about,” while Austan Goolsbee, the University of Chicago economist who held the same post early in the Obama administration tells us we can “take some heart” from the new jobs report. But they agree on one thing: The rate of economic growth has to pick up if the jobs market is to recover fully.