What do you call an economy growing less than one percent in 2011 after a month without job creation? How about the zerocovery.
Net job creation in August was exactly zero for the first time since February of 1945, as the jobless rate remained unchanged at 9.1 percent. The news gets worse. Average weekly hours, average weekly earnings, and aggregate weekly payrolls turned negative. Forget escape velocity, that's not even stall speed. That's double-dip velocity.
In what was nearly a coup for Sunday morning talk shows (and nobody else), 25,000 more unemployed workers would have brought the unemployment rate to 9.11% the week of 9/11.
The news in the Establishment Data is distressing, but the major story lines are the same as they've been for a year. The private sector, which added 17,000 jobs, is still growing, but too slowly. The public sector, which has shrunk by more than the private sector since Obama took office, lost 17,000 jobs. Since employment peaked in September 2008, local government has shed 550,000 positions. Education and health services continue to add about 30k jobs a month. That's good news for the unemployed, but as Sarah Kliff points out, it really reflects a health care industry that is incapable of controlling costs meeting an aging population head on.
In this summer of zerocovery, average job creation has been about 35,000 per month. At that rate -- about a quarter of what's needed to keep up with population growth -- we will never achieve full employment. In fact, we're farther from 2007 than the numbers suggest, because millions of workers have dropped out of the labor force, artificially lowering the unemployment rate. If the labor force had grown normally since Obama took office, the unemployment rate would be between 11 and 12 percent.
In the aftermath of a financial crisis, families and businesses cut back, and any growth in spending depends on the infusion of new cash. Either exports rake in that dough or the government prints and borrows it. We're not a country that lives and dies by exports, which means that we rely of government to act as a stopgap insurer for an economic conflagration. For two years, the federal government expanded dramatically to help states and families. In the last year, the stimulus has dried up and Congress has spent more time discussing how to cut spending than how to create jobs.
But I don't want to lay this problem at the feet of the House of Representatives. Government represents 20 percent of the economy. That's a big slice, but don't confuse it with the whole pie. What's weighing on the recovery is what has weighed on the economy for the last decade -- perhaps the last four decades. Competition from technology and foreign countries has driven a culture of productivity at most large companies which has led to strong profits at the cost of fewer jobs. This is not evil-doing, just a reality. Corporations have every right to seek higher returns and the cost of labor is relatively high in the U.S. Consumers are enjoying the fruits of cheaper goods. But cheaper information and manufactured goods means fewer dollars to pay the people to produce those goods. Productivity cuts both ways.
This Great Recession has corresponded with a Greater Recession for the middle class -- captured so brilliantly by Don Peck in his cover story last month. It didn't start with the Tea Party, or Obamacare, or the credit crunch, or even the Bush administration. It's older and bigger than all of that. And unless we figure out, together, whether it's possible for find or create not only thousands but millions and millions of good-paying jobs for the majority of the country that doesn't have a graduate degree or didn't get lucky with their career choice, everything else is band aids.