Finally, the economy appears to be delivering jobs—adding 222,000 private sector jobs and 192,000, after losses in government are subtracted, in February.
The unemployment rate fell to 8.9 percent, even as the labor force expanded with normal population growth and a steady, albeit low by historical standards, labor force participation rate. Counting those who have left the labor force and taking part-time work but would prefer full time employment, the true unemployment rate remains about 16 percent.
It is still early to break out the champagne, because the February surge came after a weak January when only 63,000 jobs were added. March data will tell much as to whether the economy is on a sustainable path for growing jobs.
Until February, the private sector was creating few permanent jobs—most jobs were either in health care and social services, which enjoy heavy government subsidies, or were temporary services jobs. In February, those two groups added strong numbers—36,000 and 16,000 respectively. After health care and social services and temporary jobs, the “core” private sector gained 170,000 jobs.
Still this is not enough, after such a deep recession, and this is much less than what the economy is capable of accomplishing.
The economy must add 13 million private sector jobs over the next three years—360,000 each month—to bring unemployment down to 6 percent. Core private sector jobs—jobs net of health and social services and temp positions—must grow at least 300,000 a month to accomplish that goal.
President Obama’s policies are not creating conditions for businesses to hire in those numbers, net of layoffs.
Temporary tax cuts, green jobs, waivers from the onerous consequences of the health care law for unions and the states, and modest reevaluation of onerous regulations on business won’t cut it.