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Hard data: Jobs market unchanged

By PETER MORICI, UPI Outside View Commentator   |   Jan. 13, 2014 at 8:19 AM   |   Comments

COLLEGE PARK, Md., Jan. 13 (UPI) -- The U.S. jobs market isn't shifting into high gear, as some analysts have suggested, and the disappointing December jobs report, standing alone, means nothing. The labor market continues to move along much as it has for the past two years. Hiring is too slow to really dent unemployment.

The December jobs gain, 74,000, was poor but the October and November gains, 200,000 and 241,000, were strong. The December three-month average was 172,000, below the annual averages for both 2012 and 2013, which were 180,000 and 188,000.

The unemployment rate fell to 6.7 percent in December largely because the percentage of adults seeking employment -- the adult participation rate -- is at historically low levels.

Anemic adult participation cannot be explained by an aging labor force, especially with so many seniors working part time to supplement disappointing returns on certificates of deposit and other retirement investments over the last decade.

Were the participation rate the same today as when U.S. President Barack Obama took office, unemployment would be about 10.8 percent.

Statements from some economists that the jobs market is improving or "shifting into high gear" do curry favor with the White House and its supporters in the media but those aren't substantiated by the data or sound economic analysis.

Low December jobs creation was an outlier as the White House and some analysts assert but over and over again good months for jobs creation have been followed by disappointing months. The hard reality is that monthly economic statistics are highly volatile -- regardless of what variable we are measuring -- and no significant upward trend in jobs creation yet can be discerned.

A stronger job market could emerge in 2014 but so far the vital signs -- as measured by the actual jobs creation and the adult participation rate -- are simply not there.

Most troubling is that Obama's jobs performance is roughly the same as the George W. Bush recovery but still not adequate to provide the job opportunities needed to employ all the young people leaving school and older folks displaced by global competition and improvements in productivity.

To accomplish that over three years would require about 365,000 jobs each month and gross domestic product growth in the range of 4-5 percent.

The pace of GDP growth during the Obama and Bush recoveries has been about the same -- 2.3 percent. The Reagan recovery accomplished 4.9 percent during the period comparable to the current recovery with radically different approaches than either the Obama or Bush presidency.

The United States is in a jobs crisis because the structural problems that give rise to slow growth, chronic unemployment, income inequality and poverty weren't addressed by Bush. And those haven't been addressed and are sometimes exacerbated by Obama.

Important among those are inefficient and dysfunctional government regulation of business, prohibitions on domestic petroleum development off the Atlantic, Pacific and Gulf of Mexico coasts and protectionist policies in China and elsewhere in Asia that limit market opportunities for competitive U.S. products.

Palliative measures, such as support for a higher minimum wage, extending food stamps and Medicaid to more families and emergency unemployment benefits treat the symptoms but not the causes of an underperforming economy. The taxes necessary to finance those actually drive investment offshore, slow growth and make the underlying structural problems worse.

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(Peter Morici is an economist and professor at the Smith School of Business,, University of Maryland, and a widely published columnist.)

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(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

© 2014 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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