OPINION:
The Obama administration received a welcome gift from the Bureau of Labor of Statistics (BLS) on Friday. The government’s official unemployment figure dipped to 8.6 percent in November, a rather surprising turn given that the economy added a paltry 120,000 new jobs that month. That’s the first tip-off that the scenario isn’t rosy. President Obama shouldn’t break out the Cristal champagne quite yet.
Only in a world of low expectations could an unemployment rate of 8.6 percent be considered good news. True enough, we’re outperforming the European Union, which is expected to grow a meager 0.2 percent. The Old World is seeing virtually no job creation as investors flee its markets. On our shores, 5.7 million Americans remain hopelessly unemployed for the long term. At best, Friday’s announcement signals that we are not sliding into recession - at least not yet.
All the same, the BLS figures are worth a closer look. In November, the ranks of the unemployed fell by 594,000 but not because everyone landed a new job. To the contrary, labor-force participation fell 0.2 percent to less than 64 percent for the first time in a long time. That means as many as 300,000 simply left the workforce, and not all did so voluntarily.
A good portion of the 120,000 new jobs reported last month appear to be driven by the needs of the holiday season. Retail added 50,000 jobs, with leisure and food adding 22,000. Professional and business services added about 33,000. What these industries have in common is that they depend heavily on seasonal help. There is little reason to believe that these gains will persist even in the medium term. Most likely, these jobs will disappear early in the new year.
If it were otherwise, we would see the long-term unemployment number budge. It hasn’t. About 5.7 million Americans have been unemployed for 27 weeks or longer, and the average duration of unemployment has increased to 40.9 weeks, according to ZeroHedge, up from 39.4 weeks. Furthermore, average hourly earnings fell slightly in November, by 2 cents, after increasing in October by 7 cents. This would suggest that the jobs being created are lower wage, which is consistent with them being temporary.
The only sector that exhibited a clear uptick was health care, adding 17,000 jobs. Health care is not going be an engine of growth. The most productive sectors of the economy are held back by the regulatory and tax uncertainty in Washington. They’re afraid to hire and expand operations when they don’t know whether their investment decisions will produce a viable return.
A bump in seasonal employment is certainly better than no jobs at all, but what’s needed is a solid improvement in long-term employment. That’s something we won’t see unless Congress gets serious about unleashing the private sector’s entrepreneurial spirit. For now, under Mr. Obama’s watch, there’s more interest in seeing the federal government prosper and grow. So long as that remains the case, millions of Americans will continue looking for jobs and won’t find them.
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