Jobs Report: It's Time to Work Together On the Economy


Friday's jobs report greatly exceeded economists expectations of 160,000 new jobs. The results were 236,000 jobs added. The unemployment rate fell to 7.7%. This jobs report shows that prior to the impacts of any political and spending decisions made recently, jobs were growing strongly. CNBC's coverage includes details of the report's findings, but there is more at play here.

Job loss has remained very low for the last few years. America has been in healthy territory for job turnover. A modest bump up in job creation would lower unemployment quickly, because we are losing so few jobs.

Political uncertainty derived from a mission to use everything to score political points may have scared hiring backwards for much of this time. This jobs report arrives just as the sequester cuts come into play, which could slash a million jobs this year, and send us backwards yet again.

From this peak, what happens to to monthly job reports if one million jobs are lost due to the recent sequestration action? Multiplying the current 236,000 jobs this month by 12 months, I get 2,832,000. Then, I subtract a million jobs and get 1,832,000. Divide that by 12 and it would drive jobs reports back to about 152,666 per month, which would not be enough to bring down unemployment. It would bring us right back to treading water.

Other reports are showing that the housing market is growing and there are other factors that may now take the market upwards. We'll see if the private sector has recovered enough to take over as government spending tapers off.

To me, the big picture is that at any time over the past four years when jobs growth has reached this level, there has been a Republican-led action to crush the nascent recovery. When there were jobs bills written that would have cut taxes and allowed the economy to take off all debate was blocked by Republicans. Republicans have blocked debate on all jobs bills and spent the past few years causing major fear and uncertainty by showing a complete lack of compromise.

Job growth was at this level prior to first manufactured debt ceiling crisis. Then it was destroyed. (Jobs numbers went from around 240,000 per month down to 53,000.) 

Job growth reaches this level right now, just as Republicans refused to work with the President to spread out the cuts and time them a little later in the recovery.

Watch videos of the process as Republicans sabotaged all jobs legislation in my previous article here. Read about the 19 or so other jobs bills that Republicans blocked debate on here. Most of these jobs bills combined previous Republican ideas and left more money in the hands of businesses and consumers (the source of economic activity).

All government activity is funded by the result of business activity and the resulting tax revenue. To improve deficits, I've felt that the Republican's focus on spending cuts is ill timed and wrongly placed, as there is plenty we can do to increase economic activity and lower deficits by outgrowing the problem.

Consider that one job added creates a taxpayer who provides government revenue. One job lost creates a person who will rely on unemployment (and maybe food stamps) a one-person additional cost to the economy. Each job added impacts the deficit from both sides and is a double bonus. So we should focus on job creation to lower the deficit, not the spending cuts that the Republicans have forced us to talk about first.

As I have watched this process unfold, I've gotten the feeling that Republicans may truly believe the government can't help. They've also ignored that uncertainty from the government level can severely hurt. So, potentially, Republicans have ignored that the government has an impact, while even making negative impacts. 

I've also questioned if they are really trying to blunt the economy so that the recovery does not occur in full force under a Democrat administration. The timing of the fiscal cliff to blunt job growth right before the election was highly suspect. When Democrats led us out of the Great Depression, Republicans held very little power in Congress for decades afterwards.

However, I'm beginning to believe that Republicans do actually think government can't help.  By believing this and acting on this, they may be carrying out their own self fullfilling prophecies. 

During the election I realized that the GOP's views on the sources of problems and the geographic location where those problems peak did not line up with reality. I saw that the largest collection of non-tax paying citizens were in states that would vote Republican. I saw that the highest food stamp usage, by nearly double, was in Republican-led states. Double the obesity, double the uninsured. I collected data maps of this, which make this conundrum easy to visualize here.

Looking at that data, my conclusion is that Republicans believe the government can't help. Thus, in states they lead, they do not allow the government to help. Massive problems persist at nearly double the rate that they do in Democrat-led states where leaders believe government is a useful tool for resolving social problems.

On the national level Republican beliefs prevented jobs bills that would have added millions more jobs now which were deficit neutral. This rigid and unbalanced ideology, which drives a refusal to compromise, has helped generate crisis-after-crisis, almost perfectly timed to arrest accelerating job growth.

While some may state that it is the President's fault, look how hard he was attacked by Romney for nationalizing Romneycare. Look how hard they have attacked the President for deficit levels when Republicans signed onto every major contributor of the deficit as the spending measures were passed. (Read the data here.)

Politics. Politics and the Republican ideology have been holding back American progress. By believing that government can't help, Republicans have assured it did not help solve problems in their states, and fought to prevent it from helping nationally. They have perpetuated crisis after crisis and pulled strength out of job creation each time it happens. Republican ideas are not necessarily bad, but they are extreme. It is the Tea Party ideology that arrived in Washington to protest government that has destroyed progress, where the mission could have been to work together to keep America strong.

So in the larger economic picture this is a great report. However, Republicans unwillingness to compromise and problematic ideology may have set the stage again for yet another pull back in job creation. How can I be so sure that Democrats have it right?

Review the trend lines in all the charts in my previous article comparing the last several decades of job creation. During every Democratic administration, including this one where the President's policies were blocked or watered down in many cases, the trend line is better and more consistent. Take a look here

So: to my Republican friends ... Yes, the government cannot help solve problems if you are in the way. Yes, the government can hurt the economy when you fail to compromise, even when your past ideas are on the table. The economy happens when you walk to the store and buy something. The more people you scare, the less economic activity there will be.

You must take into account the timing of economic policy because you keep killing job growth just as it is accelerating. You must take into account that your states have the most unresovled problems. Perhaps combining what has worked in Democratic states with what has worked in your states will create a brighter picture.

Ah, compromise. Being better off by working together. That is the way that forwards everyone. In the big picture, job growth, the economy, all will grow stronger when we all decide that we will work together towards that one aim.

So, Republicans, Democrats, Libertarians, citizens, pundits, news media, business leaders, are we ready to decide that it is time to help build up the economy? Are we ready to work on this together?

You'll notice that I am pointing the finger to pass blame during a good report because there is not a lot of blame going around during these times. I believe the economy could have been much better by now. I also believe that in a few months Republicans may be attacking the President if jobs numbers slide back again. So, this is the time to bring it up.

We all have to decide this together. In your life have you decided to spend regularly on things you want? Have you decided to invest in assets that will help you expand your net worth over time? Have you decided to maximize your education so your contribution to society is larger? Have you decided to dig in to all the ideas from both parties about how to grow the economy?

In the big picture, you are the economy. Are you ready to work together to build it again now? Are you ready to step up the momentum from where you stand? From your sphere of influence?

That's the big picture. We've been fighting all along and heavily damaging an economy that it is the responsibility both you and I to cultivate. We can slide backwards, or be off the the races. It all depends on if we have now decided to work together to make America strong.