The June jobs report reveals a much more serious job creation problem in this country than most policy makers realized. Over the past two months, job creation has essentially ground to a halt, with 25,000 jobs added in May and 18,000 in June. The unemployment rate, now 9.2%, is climbing.
Washington needs to quickly and aggressively shift from its long-term debt obsession to the much more immediate jobs problem.
To do otherwise at this point would be deeply irresponsible.
Almost everything in today's jobs report suggests recession-like conditions in the labor market. You don't want to read too much into any one report, but considering the last two reports together, the American jobs machine has stalled.
- Payrolls not only went nowhere in June -- up only 18,000 -- but May's lousy 54K was revised down to 25K;
Look, I'm not trying to be unduly negative here. Obviously, a stall is better than the massive job losses that characterized the Great Recession. But if policy makers fail to recognize that our most pressing problem right now is job creation, they are a big part of the problem. We need them to be part of the solution.
Update: Somebody Do Something!
If there's a bright spot in today's terribly lousy jobs report, it's that it occurred before a weekend when the Obama administration and leading members of Congress are slated to meet on an issue of great urgency to the nation. It's just not exactly the right issue.
There's every reason for these negotiators to complete their work on the debt ceiling, get that source of econo-anxiety behind us, and plot a path to fiscal sustainability. Obviously, we need to hold off before starting down that path -- a recovery that looked fragile yesterday looks frail today, and so spending cuts or tax increases must be delayed for at least a year if not two.
But as the president himself said today at the top of his statement on the jobs report, what matters most to people right now is economic security, and for the broad American middle class, that means jobs and paychecks.
So these folks need to open their meeting on Sunday with a new agenda item: short-term measures to revive the job market.
I know this will not be the most popular agenda item in that room. In that regard, it's essential to point out that short-term, temporary jobs measures contribute almost nothing to the long-term deficit and debt, and are thus not inconsistent with the group's fiscal mission.
The president laid out a few ideas today, much like those from his press conference a week ago (see here for my take). I think he's on the right track -- clearly in "could" vs. "should" mode -- e.g., given the hemorrhaging of state and local jobs state fiscal relief would be a great idea. But it's an extremely heavy lift. (R's don't have much interest in supporting school teachers, cops, etc... and D's aren't anxious to send more money to R governors who complain about big gov't while they're cashing the checks.)
Along with the no-air-pocket strategy -- the payroll tax break and extended unemployment insurance run out at the end of this year and thus must be extended for another year -- we could use a significant infrastructure program.
The president mentioned the usual ideas here-road, bridges, railway -- and I'm for 'em. But as I've stressed, at least the first two in that list turn out to be more capital than labor intensive, and less popular compared to what I think is a better alternative: FAST (Fix America's Schools Today).
You really don't know until you try it, but I remain confident that this work repairing the nation's stock of public schools is labor intensive, meaning it will have a strong bang-for-the-buck in terms of job creation, the spillovers are highly positive, and this is work you can see in your community.
I also think Dean Baker's idea of work sharing -- reducing everyone's hours a bit instead of laying off somebody (and using UI payments to make up a portion of the wage loss) -- could help, though I doubt it's a "quick route back to full employment." Take up in states that already have it is low, and so this might be hard to scale up... still, we should try-this program also has a very high bang-for-buck in terms of preserving jobs.
These ideas were important before the release of today's jobs report. With the new information we now have, they're essential.
This post originally appeared at Jared Bernstein's On The Economy blog.