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Waiting for Recovery

Editorial
Published: January 6, 2012

In its broad strokes, the December employment report [ http://www.bls.gov/news.release/empsit.nr0.htm ] is an upbeat finish to a difficult year. Job growth accelerated, the workweek expanded modestly, wages ticked up and the unemployment rate declined.

Unfortunately, it will take far greater monthly growth than the 200,000 jobs created in December — and higher quality jobs — to spur significant consumer spending and a self-reinforcing recovery. For that to occur, the government will have to do more.

At a minimum, to avoid a collapse in consumer demand and a rise in joblessness, Congress needs to extend existing federal unemployment benefits and the payroll tax cut beyond their expiration in late February. To create jobs now while laying a foundation for future growth, the economy needs a broader jobs agenda, like the one proposed last year by President Obama, including government spending for public works, aid to state and local governments and an infrastructure bank.

Before Congress recessed for the holidays, Republican lawmakers resisted all that. In the face of intense public disapproval and pressure from their own leaders, they finally agreed to renew jobless aid and the payroll tax cut — but only for two months. The question now is whether Republican lawmakers will continue to resist and reduce even basic assistance.

If they don’t do what is needed, it will be impossible to gain any traction in the still-ailing job market. December’s tally, 200,000 more jobs, was almost surely inflated by about 40,000 jobs because of a problematic seasonal adjustment in counting holiday couriers and messengers.

Meanwhile, gains in higher-paying blue-collar jobs, which are essential to strong consumer spending, were tentative. An addition of 23,000 manufacturing jobs, for instance, followed four months of little change. Categories that have been steadily adding jobs (retail stores, bars and restaurants) tend to be low-paying, while categories that were flat in December (including state government jobs) tend to be solidly middle class.

Joblessness, though declining, continued to exert a profound drag on the economy. The unemployment rate dropped to 8.5 percent in December, compared with 8.7 percent in November and a peak of 10 percent in October 2009. The improvement is not as dramatic as it seems, however, because the difficult job market over that period has caused many potential workers to drop out (or never enter) the labor force.

In the four years since the Great Recession began in December 2007, nearly everyone in the country has been touched by mass unemployment. If you are lucky to have held on to your job, you surely have relatives and friends who have lost theirs or children who haven’t been able to find one. In December, unemployment among 16-to-24-year-olds was 16.7 percent, still up 5 percentage points since the start of the recession.

Among workers ages 25 to 54, joblessness was 7.6 percent, and for workers age 55 and older it was 6.2 percent; for both age groups, the current jobless rates are still far higher than their prerecession levels. Even among college graduates under 25, unemployment averaged 9.2 percent over the past year. A lot more help is needed.

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Related News

U.S. Economy Gains Steam as 200,000 Jobs Are Added (January 7, 2012)
http://www.nytimes.com/2012/01/07/business/economy/us-adds-200000-jobs-unemployment-rate-at-8-5.html

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© 2012 The New York Times Company

http://www.nytimes.com/2012/01/07/opinion/waiting-for-recovery.html