The BLS unemployment data released today showed a glimmer of hope. However, drilling into the report some interesting facts jump out. Payrolls rose by 162,000 which is something of a relief compared to the 500k loss per month devastation that was taking place this time last year.
However, out of those 162,000 new jobs, 39,000 were directly attributable to the census hiring binge and another 80,000 were government jobs. Taking away those major components of the report, probably only 40,000 net new private sector jobs were created and it is those jobs that pave the way to recovery. Voters understand this, which explains why the President’s job approval numbers continues to deteriorate.
As a side note, Michael Barone wrote a piece recently that speaks indirectly to the importance of private sector jobs versus government jobs and how it relates to rise of the Tea Party movement.
Over the past 14 months, our political debate has been transformed into an argument between the heirs of two fundamental schools of political thought, the Founders and the Progressives. The Founders stood for the expansion of liberty and the Progressives for the expansion of government.
It’s an argument that has been going on for a century but was largely dormant over the quarter-century of low-inflation economic growth that followed the Ronald Reagan tax cuts. It’s been raised again by the expand-government policies of the Obama administration and Democratic congressional leaders.
I think much of the heat that has surrounded the current political debate is the result two things that Barone mentions. First, the constituency that embraces the Founder’s beliefs inherently distrusts the rise of government affluence and influence. Second, there is a large and loud constituency today that is the product of the Reagan revolution that saw the impact of the Reagan tax cuts (particularly on employment) and has first hand experience with the inimical effects of high marginal tax rates and intrusive government influence in the private sector. In that context, today’s unemployment report simply tells us the patient may have stopped bleeding, not that recovery is imminent.