The September employment numbers released by the U.S. Labor Department are disappointing by almost any standard. The number of new jobs totaled only 96,000, an increase of less than one-tenth of 1 percent. The unemployment rate remained constant only because 220,000 people decided to stay at home. Service sector jobs grew by more than the total increase in new employment, while employment in manufacturing dipped by another 18,000. Since the population is growing at a rate of about 220,000 a month, the number of jobs being created not only fails to provide any real expansion of employment opportunity, it probably is too small to sustain family income or living standards.
It is certainly time now for policymakers to recognize what we at the Center for American Progress have been saying for many months. This is not a normal business cycle. There are serious structural demand side issues that if not addressed in the near term have the potential of inflicting very serious long-term damage on both the U.S. and world economies. The failure of workers to gain a commensurate share of productivity gains in recent years has depressed wages and consumer buying power. Simultaneously, this has provided an enormous surge in corporate profits (up 40 percent in only four years), but many of those profits are not being recycled into investment in plant and equipment. Business leaders recognize that there is insufficient demand to warrant such investment and a dramatic decline in taxation has allowed mountains of cash to build up in corporate coffers.
Scott Lilly is senior fellow at the Center for American Progress.