More Jobs Won't Make the Stimulus More Popular

The US recovery continues to chug along in manufacturing, as factories are already adding jobs and reporting stronger demand. That's good news for jobs, which appear poised for some kind of comeback. Matt Yglesias predicts the unemployment news is about to turn for the administration:

A big topic of discussion at yesterday's White House meeting had to do with who's to blame for the fact that so few members of the public recognize that ARRA is working. I think this is actually a problem that's going to turn around very soon ...

It's just difficult, as a writer or an advocate, to convince people that ARRA is creating jobs when everyone knows that there's no net job growth. If there's no job growth, then what jobs are being created? Then you get into counterfactuals and nobody is persuaded. But we'll be into positive territory very soon. Which means you won't be able to ask "where are the jobs?" The answer will be "the jobs are right here!"

I want Matt to be right. Any yet, the Council of Economic Advisers expects unemployment in 2010 to average 10 percent and close the year at 9.2 percent. But wait, you say, unemployment was only 9.7 percent in January. How could the yearly average be higher?

The administration expects discouraged workers who left the labor force -- and are not counted as officially unemployed -- to come back when they see more jobs. (During the recovery, this group has equaled as much as 7 percent of the labor force.) Encouraged workers are good for the economy, but their re-entry in the labor market might look like bad news in the unemployment report. A larger labor force means a bigger denominator in the employment ratio, so even if the economy is creating more jobs than it's shedding, the percent of Americans in the labor force who don't have a job could stay the same or even grow.

Summing up: Jobs might be coming back. But the unemployment rate isn't going down under 9 percent any time soon. Until that number looks like it's plummeting, most Americans are unlikely to revise their opinion of the Recovery Act, or its impact on jobs.