The President pointed to the 80,000 jobs gained in June as a step in the right direction. While it is a step in the right direction to be sure because a positive net gain in jobs is always better than a net loss it is not really that good of news for job creation. It is up from the last two months, but for the quarter the U.S. only added about 75,000 jobs per month.
This is problematic for two very important reasons. Reason one is that the number of people estimated to be trying to enter the workforce in any given month is somewhere between 125,000 to 150,000. This means that with a net gain of 75,000 jobs that between 50,000 and 75,000 people who were looking for first time work are unable to get employment. The other problem revolves around looking at participation in the job market.
Approximately 45% of all Americans have a job. When you factor out children under the working age, retirees and others (prisoners, invalids, etc) You are left with a job participation rate of 63.4%. This is great, but it is down from the job participation rate only 5 years ago which was 67%. This means that these 3.6% of people, which constitute somewhere between 4.5-5.5 million people have permanently left the workforce. This is bad, bad news.
There has never been a recovery from a recession that did not include not only net gains in jobs, but also net gains in the percentage of people actively participating in the work force. This just won’t hold water in the long run, unless we add more people to all sectors of the job market and post net gains in participation.
The President has touted the fact that in the last 28 months we have created 3.5-4.4 million jobs and he is presiding over a great recovery. However, this is selective sampling, or voodoo jobonomics. The point most people miss here is that he has been president for 43 months now. The 15 months prior to the last 28 saw a loss of almost 8 million jobs. So, if you add the two together in the 43 months he has been president we have at least a loss of 3.6 million jobs leading to our unemployment rate of 8.2 percent. A rate that might I add is only lower because of the people permanently dropping out of the job market and lowering the ratio of workers to those still looking for work.
It is not good news for the economy at all.