Dismal Jobs Reports Driven by Continued Cuts to Public Sector, say Analysts
More public spending -- not austerity -- needed to lift economy, economists argue
The May jobs report released today by US Department of Labor was called 'disappointing' and 'dismal' by economists and analysts as the economy added just 69,000 jobs during the month and the official unemployment rate rose from 8.1 to 8.2 percent.
"Today’s disappointing employment report shows that the labor market remains far below full strength," Chad Stone, chief economist at the Center on Budget and Policy Priorities, said in a statement.
Stone said the report should be a caution to elected officials who have pressed for tightening unemployment insurance benefits for those out of work. "Since policymakers created the first such program in 1958, they have never allowed it to end when unemployment topped 7.2 percent — and they certainly should not start this year," he said.
Robert L. Borosage, co-director of the Campaign for America’s Future, responded to the report by saying it “confirms what we already know: mass unemployment and its harsh human misery remain the fundamental challenge facing America." Borosage pointed to continued public sector cuts as the biggest reason for the stagnant economy.
"Layoffs of public employees at the state, local, and now the national level are a continuing drag on the economy. If the public sector employed as many workers today as it did on the eve of the financial collapse, 2 million more people would be employed, and our unemployment rate would be about a percentage point lower." --Robert Borosage, Campaign for America's Future
"Layoffs of public employees at the state, local, and now the national level are a continuing drag on the economy. If the public sector employed as many workers today as it did on the eve of the financial collapse, 2 million more people would be employed, and our unemployment rate would be about a percentage point lower," he argued.
Robert Reich, Former US secretary of labor, said it's necessary to look at events both inside and outside of the United States for a full picture of the dismal economic picture.
"Part of the problem is the rest of the world," he said. "Europe is in the throes of a debt crisis and spiraling toward recession. China and India are slowing. Developing nations such as Brazil, dependent on exports to China, are feeling the effects and they’re slowing as well. All this takes a toll on U.S. exports."
But a bigger part of the problem, Reich continued, is on the domestic demand side. "Big companies are still sitting on a huge pile of cash," he said, but they "won’t invest it in new jobs because American consumers aren’t buying enough to justify the risk and expense of doing so."
No president since Franklin D. Roosevelt during the Great Depression has won re-election with an unemployment rate as high as it is today, noted many political observers and the numbers and history suggest that Obama's road to re-election becomes much more arduous with each month bringing the same poor news for the nation's unemployed.
"Republicans will have a field day with today’s jobs report," predicted Reich. The GOP, he argued, would take it "as a sign that Obama’s economic policies have failed and we need instead their brand of fiscal austerity combined with more tax cuts for the wealthy."
"That," however, said Reich, "is precisely the reverse of what’s needed."
And Pat Garofalo, the economic policy editor at Think Progress, laments the drive by "cut-happy Republicans," whose austerity drive in Congress has led to "hundreds of thousands of public sector job losses." Writing:
Last month alone, 7,000 state and local level education jobs disappeared.
It makes no sense to sustain these sort of economic body blows when the government can borrow on the cheap and use it to put people back to work. Speaker of the House John Boehner (R-OH), though, responded to the jobs report by criticizing the supposed “‘stimulus’ spending binge” (the existence of which is a myth), and Republicans have made no indication that serious job creation efforts are on their agenda.
Boehner, of course, neglected to mention that the spending cuts the GOP demanded in return for raising the debt ceiling will stifle job creation, and that the GOP refused to pass the Obama administration’s American Jobs Act, which economists said would create millions of jobs. In fact, Boehner has already indicated that he and the GOp will demand more spending cuts as the nation approaches its borrowing limit again later this year.