The slow recovery in public sector hiring disproportionately affects African-Americans and women, who make up a larger share of the public sector workforce than the private sector labor pool.

By Daniel Marans

The Huffington Post, October 2, 2015 — The September jobs report is spooking even the optimists.

The especially poor September jobs report reinforces what many economists have been saying for months: The six-year recovery from the Great Recession has been too weak to create enough jobs for America’s growing population, let alone restore significant wage growth.

Domestic fiscal austerity, not recent global volatility, is primarily to blame for the inadequate job growth, these economists argue.

The U.S. economy created 142,000 jobs in September, bringing average monthly job growth to 198,000 this year — way down from the monthly rate of 260,000 in 2014. Average hourly wages decreased slightly in September, meaning pay has risen just 2.2 percent in the past 12 months.

In addition, the percentage of the population working or looking for work has dropped to 62.4 percent, the lowest it has been during the Obama presidency. The progressive Economic Policy Institute estimates that we need 2.6 million more jobs  to keep up with population growth.


The jobs that the U.S. economy is creating mostly involve low-pay, low-hours work in the leisure, hospitality and retail sectors.

Dan Alpert, managing partner at Westwood Capital investment bank and author of The Age of Oversupply: Overcoming the Greatest Challenge to the Global Economy, estimates that 43 million Americans now work in part-time jobs that pay less than $26,000 a year.

“What we are getting is if you sell a few more hot dogs this month, you may want to hire more part-time help,” Alpert said. “That is not the same as buying a second hot dog stand, which is what we want. Capital investment by businesses is incredibly low and that is how we create jobs.”

The September numbers — and revisions showing much smaller gains in July and August than first estimated — gave even the most optimistic economists reason to doubt the stability of the recovery.

Last month, Justin Wolfers, a professor of economics at the University of Michigan, was musing on Twitter about the “Obama Boom” economy in light of 66 months of private sector job growth. On Friday, Wolfers was more sober, tweeting that the main job market indicators he examines were all “#ungood,” while still warning people not to “get lost in the jobs report gloom.”

In fact, the September numbers show a heightened trend of lackluster job growth.

Wolfers and other economists who are upbeat about job growth tend to focus on the official unemployment rate, which remains low at 5.1 percent. But that rate does not count millions of people who are working part-time but want full-time work or have stopped looking for work entirely since the Great Recession. When accounting for those factors, the current unemployment rate is actually 10 percent.

The especially sluggish jobs gains in the past two to three months and the decline relative to 2014 may be due to the appreciation of the dollar, which has made U.S. exports more expensive. As a result, the manufacturing sector, which many believed was experiencing a “comeback,” lost 9,000 jobs in September.

But the biggest drag on the U.S. recovery has been years of fiscal austerity at all levels of government.

Since 2010, Republicans in Congress have demanded massive reductions in federal government spending, limiting its traditional role as a rejuvenator of consumer demand. Every dollar of government stimulus during a downturn generates significantly more in economic growth than its cost. Congress’ partisan dysfunction has also played a role, with episodes like the October 2013 government shutdown costing the economy $24 billion in lost gross domestic product.

When state and local governments ran out of money during the recession, the federal government largely left them to fend for themselves. They coped by eliminating 765,000 jobs between 2007 and 2011. Many states have since declined to restore public spending for political or ideological reasons, even as their revenues have risen.

Consider the plight of teachers. Nationwide, there are 236,000 fewer public education jobs today than in September 2008, according to an Economic Policy Institute analysis — and 410,000 fewer than needed to keep up with student population growth since then.

The slow recovery in public sector hiring disproportionately affects African-Americans and women, who make up a larger share of the public sector workforce than the private sector labor pool. That may be one reason the official black unemployment rate remains alarmingly high at 9.1 percent.

House Republicans also blocked the extension of long-term unemployment benefits in December 2013, effectively limiting benefits to the 26 weeks that most states offer. That move, Alpert said, forced more people to take the only jobs available — low-paying, part-time positions.

The effort to stimulate growth has been largely left to the Federal Reserve, which many argue has limited power to counter the effects of austerity. The Fed seeks mainly not to harm the economy by keeping interest rates low. It left its benchmark interest unchanged in September based on such concerns.

“These are disappointing numbers at this point in the recovery just after the Fed has decided to keep our record-low interest rates,” said Tara Sinclair, chief economist for job site Indeed, in a statement on the latest jobs report. “It’s a sign that, at this point, the Fed may really be out of gas in terms of what they can do for the economy.”

Unfortunately, the economy may need to get worse before enough Americans recognize that cutting government spending is not the answer.

“Americans are loath to take extraordinary action,” Alpert said. “It is only when they experience real pain that they vote for people who do the right thing as opposed to ideological cranks who believe in fairies.”