Today's Jobs Report Has One Simple Message: Stop Cutting the Deficit

And bring back the payroll tax cut.


There are three numbers you need to know about the March jobs report: 168,000, 46,000, and 1.7.

Those are how many jobs we've created, on average, the past three months; how many fewer retail jobs we have than we did last month; and our 10-year borrowing costs.

Together, these three numbers have one, unambiguous message: STOP CUTTING THE DEFICIT.

That's not a new message. The recovery has been stuck in stall speed almost since it began, and certainly doesn't need another degree of difficulty from even more fiscal tightening. But that's exactly what we've given it, between the expiring payroll tax cut and the sequester. Here's why the three above numbers explain why this is such a bad idea.

-- 168,000. The good news is there's too much statistical noise in any one jobs report for us to worry too much about the disappointing 88,000 jobs the Bureau of Labor Statistics (initially) estimates we added in March. The bad news is that even with the 61,000 in upward revisions to previous months, our three-month average is only the aforementioned 168,000. At this rate, it will take almost 10 and a half years to get back to full employment, according to the Hamilton Project's jobs calculator. By that point, the long-term unemployed will be unemployable.

-- 46,000. Retail lost 24,000 jobs in March, and as Karl Smith of Modeled Behavior points out, it lost another 22,000 in downward revisions to previous months. Now, this might just be a statistical blip or Amazon continuing to hollow out brick-and-mortar shops. But, as Annie Lowrey of the New York Times argues, it's hard not to suspect the end of the payroll tax cut has something to do with it. There's a pretty straight line between less money in consumers' pockets and less money in retailers' registers.

-- 1.7. After "surging" above 2 percent amid economic optimism, 10-year borrowing costs have tumbled recently due to the never-ending euro crisis and the underwhelming jobs report. Adjusted for inflation, markets are actually paying the government 0.7 percent to borrow. Pretty generous of the bond vigilantes -- if, you know, they actually existed.

In other words, the economic story remains the same. Job growth is still far too slow given the hole we're in, households are still rebuilding their post-crash balance sheets, and the government is still getting paid to borrow. Rather than arguing over who has the best deficit-reduction plan, Washington should be arguing over who has the deficit-increasing jobs plan. The government should be borrowing more money right now, and spending it on things like schools and research and infrastructure.

The government should be helping out households more too. Letting the payroll tax cut expire was a fairly obvious mistake that should be reversed. But even better than bring it back would be bringing back, and doubling, the Making Work Pay tax credit. It's structured to mimic the payroll tax cut, but it targets more of its benefits on lower-and-middle income households, as you can see in the chart below from the Tax Policy Center.


It's time for politicians to worry more about the unemployed than about bond vigilantes. The former are real and really need our help. The latter are not.