Bull Market in Government It's the only sector that seems to be hiring.
American workers saw the disappearance of another 663,000 jobs in March, bringing the total since the start of the recession to 5.1 million. The U.S. unemployment rate rose to 8.5%, up from 8.1%, and almost one in 12 adult males is now jobless. The numbers are even drearier when you notice that only the government seems to be hiring these days.
Almost every private industry lost jobs last month. Construction (126,000), manufacturing (161,000), and business services (133,000) all contracted and even retail -- which is typically resilient -- shrank by 48,000 jobs. Only education and health care added positions, and both of those are financed in substantial part by government. Even the government dropped 5,000 jobs in March, thanks to state and local cuts, although since February 2008 government has added some 97,000 workers.
College graduates are now looking toward government to start their careers, since there aren't a lot of other places to look. Unemployment for government employees is about half the rate of almost all private industry workers, and Washington, D.C., is a rare U.S. city that seems recession-proof.
The question in the coming months is where new private-sector growth will come from. President Obama's budget does no favors to industries that are struggling. The higher income tax rates will make it less profitable for small businesses to expand and hire more workers. Manufacturing and utilities are unsure whether they'll get hit with a cap-and-trade tax on carbon energy. The oil and gas industries, which employ 1.1 million workers, face some $31 billion in higher taxes on new exploration and development.
The Keynesians who populate the Obama Administration believe that public spending can generate a surge in economic growth. And they are banking on the $800 billion stimulus to create some one to three million new government or government-contractor jobs to prevent the jobless rate from going too much higher.
But all of that money for government spending has to come from somewhere, and that means it is either taxed or borrowed from the private businesses and risk-takers who are ultimately the only source of new wealth and job creation. The longer we ignore that lesson, the longer the jobs recession will last.
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