There was good news on the jobs front Friday. The Bureau of Labor Statistics said the unemployment rate dipped to 7.7 percent in February. That's the lowest figure since President Obama was sworn in in 2009, but it's not quite time to break out the champagne.
The U.S. economy added 236,000 jobs last month, and the lines at the unemployment office are indeed shorter. On hearing this, Alan Krueger, the administration's top economist, boasted that "today's employment report provides evidence that the recovery that began in mid-2009 is gaining traction."
Yet these things aren't happening because the jobs picture has improved in any meaningful sense. The unemployment lines are shorter because more people are giving up hope of finding a job in this anemic economy. It's not that they have found work, they're just tired of standing in line.
This phenomenon is measured by the labor force participation rate, which has tumbled from 63.9 percent to 63.5 percent over the past year -- a historic low. It means the share of Americans with jobs isn't improving, even though the official unemployment rate looks better on paper. All told, according to the Bureau of Labor Statistics, there are about 1.7 million more Americans outside the labor force today than a year ago. So even though the economy is adding jobs, they're not being added fast enough to make a difference. We're still down 2.9 million jobs from the start of the Great Recession.
Another dent in the positive jobs numbers is that 48,000 of the new jobs were in construction, mostly related to rebuilding after Hurricane Sandy. These jobs are particularly good news for construction crews, but replacing destroyed wealth does not expand the opportunity for employment and wealth creation.
The number of long-term unemployed remains unchanged at 4.8 million, which means 2 out of 5 prospective workers without a job have been searching for at least 27 weeks. The longer it takes to find a job, the more time bank accounts have to run dry and job skills have to rust. What should have been a short break between jobs can spiral into permanent joblessness and despondency.
It doesn't have to be this way. The economy has stalled, with growth in the last quarter of 2012 estimated at a barely perceptible 0.1 percent. We were told the easy-money policies at the Federal Reserve would revive the economy by keeping interest rates artificially low. We were also told a trillion-dollar government stimulus spending package would get America back to work. We're years into these policies, yet this is the weakest economic recovery since the end of World War II.
President Obama has to admit that his policies have failed, and he must find fresh ideas. Cutting back the regulations and taxes that make it too expensive for businesses to hire new employees would be a good start. Greater economic freedom is the path back to the days of 4 percent unemployment.
The Washington Times
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