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Jobs Report Shows Need for Pro-Growth Policies

Job fair

SOURCE: AP/Alan Diaz

Job seekers Emilio Ferrer, Brian Ferrer, and Jonathan Ferrer of Hollywood, Florida, talk to a FirstService representative at a job fair in Miami Lakes, Florida, Wednesday, August 14, 2013.

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This column was originally published on MarketWatch.

Even before radical conservatives in the House of Representatives shot the economy in the foot by shuttering the government and risking the calamity of a U.S. Treasury default, job growth in September remained inadequately slow. With national employment growing by just 148,000 jobs last month, it will be long after today’s Tea Party heroes flame out that the U.S. economy clambers back to full employment.

The good news is that, with the government reopened and the debt limit raised, the House can redeem itself for the economic damage it has wrought by voting on bipartisan economic and budgetary initiatives already on the agenda. These initiatives include replacing the mindless sequester cuts, passing comprehensive immigration reform, and moving forward on infrastructure and education investment.

Released 18 days late due to the government shutdowntoday’s Bureau of Labor Statistics report provides a stark reminder of the breadth of damages wrought by conservatives’ long march to cut public spending and just about any other policy that would move the country and our economy forward. The shutdown disrupted U.S. statistical systems, too.

Good information is critical to a well-functioning economy, providing guidance to policymaking, financial markets, business investment and hiring, and family budget decisions across America and around the world. Not only did the shutdown delay dozens of reports, but the delays also compromised how accurately we can measure certain conditions in the U.S. economy—employment, inflation, household consumption, and the overall size of the economy—for the next seven months.

Today’s data were unaffected by the shutdown and show overall unemployment ticking down 0.1 percentage points but basically unchanged at 7.2 percent. Though generally moving in the right direction, these numbers belie a much deeper unemployment problem. Today, only 58.6 percent of Americans are working, compared to more than 63 percent in 2007, before the Great Recession—a difference of 9 million people who have fallen out of the U.S. labor force during the recovery.

U.S. employers added an average of 143,000 jobs per month over the past three months, compared to an average of 235,000 per month in April 2011 when House Republicans voted for Rep. Paul Ryan’s (R-WI) so-called “Path to Prosperity” budget. That budget forged conservatives’ policy template of political obstruction, cutting social services while sharply lowering taxes for billionaires and raising taxes on the middle class.

Today’s report shows that over this time, the majority of new employment was not too prosperous but rather concentrated in typically low-wage jobs in the health care, retail, leisure and hospitality, and temporary employment industries with little opportunity for career advancement. Real wages for the average nonmanagement worker are down 18 cents an hour today relative to January 2011.

To be certain, spending cuts aren’t the only woes besetting the U.S. economy, but cuts have undoubtedly sapped aggregate demand from the recovery and cut public investments to enhance the U.S. economy’s supply-side competitiveness. Since 2010, cuts to discretionary spending—the part of government that conservatives shut down for 16 days this month—have shaved 0.7 percentage points, or about two-fifths, from the annual economic growth rate and meant 1.2 million fewer jobs, according to private research firm Macroeconomic Advisers.

Next month’s jobs report will be delayed, too, and will undoubtedly show a worsening of conditions as a result of the political fight waged by radical House conservatives.

It doesn’t have to be this way. The sequester spending cuts were designed to be so mindless and painful that no one would want them. Now is the time to replace these with a more thoughtful approach to fiscal policy. Immigration reform, which already passed the Senate on a bipartisan basis, shares the support of House Republican leadership and would boost employment and economic growth, while reducing the budget deficit by nearly $1 trillion over the next two decades. Infrastructure and education investment enjoys support across the political spectrum—from the AFL-CIO to the U.S. Chamber of Commerce.

With the people’s government now back on-line, the House can redeem itself for the economic damage done by focusing on economic and budgetary winners in the already bipartisan agenda.

Adam S. Hersh is an Economist at the Center for American Progress.

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