Today’s jobs report, issued by the U.S. Department of Labor, caps two weeks of conventions where the Republicans charged President Barack Obama with mishandling the economy while Democrats continued to remind us that Mr. Obama inherited the worst recession since the Great Depression and that while there has been some progress in job growth, there is still more work to be done.
Black Americans probably concur with Mr. Obama’s assessment that the job is not finished in terms of the economy. The unemployment rate for Black Americans remained at 14.1% in August, the same rate as in July and the third consecutive month this year where the rate has exceeded 14%. While the percentage of blacks 16 to 64 years of age participating in the labor force held steady for the second month in a row at 61.4%, the number of labor force participants fell for the second straight month from 18,383,000 in July to 18,379,000 in August. The estimated number of the unemployed held very steady with 2,583,000 unemployed in August versus 2,585,000 unemployed in July.
With the presidential election now eight weeks away, there is not much left in the rhetorical arsenal that can turn around employment in that short period of time or probably over the next twelve months. Fiscal policy is pretty much relegated to the federal government increasing or decreasing purchases of goods and services; raising or lowering taxes; or raising or lowering the level of income transfers. Given the inability of Congress and the White House to agree on a budget for the past three years, the probability of implementing policy that would positively impact aggregate demand over the next 12 to 18 months is minimal at best.
There may be some administrative or regulatory measures that the federal government can take. According to a research note from University of Maryland economist Peter Morici, if the Administration wants to see a turnaround in employment, there are a number of initiatives it should consider. They include:
• Producing more domestic oil;
• Addressing trade imbalances with China;
• Relaxing burdensome regulations;
• Curbing healthcare mandates and costs;
These initiatives could lead to creating an additional five to ten million jobs, according to Professor Morici. The U.S. needs an additional 13.6 million jobs over the next three years to bring unemployment down to six percent.
A rate of four to six percent has historically been considered the range for natural unemployment.
Professor Morici also added that relaxing trade imbalances with China could lead to employment growth in manufacturing and its supporting industries.
Raymond Kane, chief economist for the Small Business and Entrepreneurial Council, in a press release earlier this morning urged that the federal government pursue policies that would promote private investment; create tax and regulatory stability; lower energy and health costs; increase global market access; and put the nation on a sound fiscal course.
None of these suggested policy initiatives will do much unless there is an increase in consumer demand that incents businesses to hire more labor. But unless people are working, businesses have no market to sell into. The usual catch-22.
The answer may lie in the markets themselves rather than primarily with policy initiatives. Businesses may have to enter into new consumer markets to sell goods and services and create the consumer demand needed here at home. Given trade barriers, entering different markets may take some time and call for more aggressive trade promotion on the part of the U.S.
Along with global market access, labor may have to consider preparing to enter the labor market abroad. As businesses look for more opportunities overseas, American labor, especially younger workers with skills may have to prepare itself to follow American businesses to foreign markets and seek employment overseas as well.