During a recent speech at the University of Wisconsin, President Barack Obama patted himself on the back for 64 straight months of private sector job growth — “a new record,” he proclaimed — and a total of 12.8 million new jobs.
On the surface, the numbers look good. They are also deceiving, however.
The president proudly pointed out that the new unemployment rate is down to 5.3 percent from 5.5 percent — its lowest percentage since 2008 — and that businesses created another 223,000 jobs last month. As usual, however, the decline in the unemployment rate isn’t all it seems. While U.S. employment has increased for 57 straight months, the labor participation rate — the share of working-age people participating in the workforce — dropped to 62.6 percent from 62.9 percent in June, which means that the percentage of Americans either working or looking for work is at its lowest point since 1977, when Jimmy Carter was president. That’s a 38-year low.
For all the economic indicators that are looking up, the fact that the labor participation rate is at its lowest since the Carter administration is incredibly discouraging. And with more and more baby boomers hitting retirement age, the participation rate will continue hitting record lows for at least a decade.
June’s job growth was focused in the service sector, with retailers adding 33,000 jobs, health care adding 40,000 more, and leisure and hospitality jobs increasing by 22,000. On the flip side, the manufacturing sector, which President Obama told the crowd in Wisconsin is “growing faster than the rest of the economy,” only added 4,000 jobs last month. And job growth in the construction industry was unchanged.
Wages, another key indicator of economic growth, were flat last month, too. And yes, the unemployment rate fell, but only because people stopped looking for work. While jobless claims haven’t risen above the 300,000 mark for 17 straight weeks, the number of people applying for jobless benefits reached a five-week high in the week ending June 27.
At first glance, the headlines might seem encouraging, but in reality, the economy continues to grow at the same underwhelming rate that it has for the past several years. Even the most exciting number — the decline in the jobless rate — was due to a weaker labor market. The U-6 unemployment rate, which includes discouraged and underemployed workers, is still close to 11 percent. Simply put, the numbers show we need better economic policy.
Like he does in virtually every speech he ever gives, President Obama told the Wisconsin crowd that, despite the progress, “we still got more work to do.”
“The question we’ve got to keep asking ourselves is, where do we go from here?” he said.
We’re glad you asked, Mr. President.
The economy desperately needs pro-growth corporate and income tax reform in order to encourage investment. We need to radically scale back Obamacare or, preferably, repeal it completely. And we need a better energy policy and regulatory environment that doesn’t have the clear goal of increasing everyone’s costs. Then, and only then, will we be able to, in the president’s words, “rebuild our economy on a stronger foundation for growth.”