January Jobs Data Isn't Good Enough
Economy: The jobs data for January showed modest improvement, with unemployment dropping to 9.7% from 10% and the number of jobs lost coming in at a mere 20,000. Good news, but not nearly good enough.
It's too soon to bring out the party poppers and streamers. But at least the hemorrhaging in the job market has stopped. Last year, the U.S. lost on average 392,000 jobs a month, while unemployment rose as high as 10.2%. Set against that, 20,000 jobs lost and a 9.7% jobless rate sound pretty good.
Two things bode well for 2010. One, factory overtime now averages about 3.5 hours - meaning that companies may soon have to hire more workers. Two, temporary-help jobs - rising 52,000 in January - suggest that some businesses are short on workers.
All very nice. Yet at this point in our recovery we should be creating many more jobs than the anemic totals posted so far. At this rate, job growth may not be enough to sop up our work force.
Since 1990, an average 113,000 people a month have been added to U.S. payrolls. When job growth is less than that for a sustained time, the economy suffers.
Based on new estimates, we've lost 8.4 million jobs since the start of the recession, more than 4 million last year alone. If we averaged 200,000 new jobs a month, it would take more than eight years to get back to even, after factoring in work force growth.
President Obama, realizing that his political future depends on creating jobs, used his State of the Union address to assert that "jobs must be our number one focus in 2010."
The president wants to tax big investment banks on Wall Street and give $30 billion to community banks to lend to small businesses. He's also creating a $5,000 tax credit to encourage small businesses to hire workers and raise their pay.
Democrats in Congress are working hand-in-glove with Obama to pay for a "jobs program," and they may even use unspent portions of the $700 billion TARP fund - a clear violation of the law.
As the job market improves modestly, they might be able to convince people that their programs are working. But they aren't. The real job creators have been shoved to the sidelines by all this government spending - and threatened with higher taxes, more regulations and even takeover if they don't play along.
Witness the $2 trillion that the new budget expects in added taxes over the next decade. This will drain investment capital from the productive sector of the private economy, costing Americans jobs, income, job security and quality of life.
Obama's tax hikes on the wealthy are another case in point. Popular with the envious, they'll backfire as those targeted simply stop investing in high-risk, job-creating enterprises. The jobs lost won't be visible to us; we'll all just feel poorer.
About 40% of the population now has a negative effective tax rate - that is, they're subsidized by the rest of us. Obama's plans would make this inequity even worse.
By raising rates on families with incomes over $250,000 and individuals earning $200,000, the president will encourage the real job creators - entrepreneurs and small businesses, mainly - to preserve their capital, not risk it.
"Tax credits" for small businesses, while perhaps welcome, aren't long-term job creators. Nor are the $1.3 trillion in new taxes levied on U.S. multinationals by 2020. These levies will kill U.S. competitiveness and encourage job creation elsewhere.
So all in all, while the worst in the job market may be over, we're not out of the woods by a long shot.
Big, intrusive government is a job killer, and payrolls are still shrinking even after two straight quarters of GDP growth. We only wish the president and Congress would see this before it's too late - and we face the specter of a double-dip recession.
