Podcast: The July Employment Report and What It Means for the Economy
I’m Michelle Bazie and I’m here with Chad Stone, the Center’s Chief Economist to discuss the employment report for July.
1. Chad, what does the July report show?
It shows us that the economy is still struggling to create jobs and to bring down the unemployment rate.
Overall, the economy lost 131,000 jobs in July, mainly because of the scheduled phase-out of temporary census jobs. The two real stories however are the weakness of private sector job growth—only 71,000 jobs were added there; and the loss of 48,000 state and local government jobs, including almost 30,000 in education.
The unemployment rate stayed at 9.5 percent and it’s not likely to come down much anytime soon unless we start creating a lot more jobs than we have been.
2. How many jobs do we need to start creating?
The recession created a gaping jobs deficit and we are still 7.7 million jobs short of where we were at the start of the recession. It would take job growth of 300,000 jobs a month for two years just to close that gap, and, because the population has been growing, it will take more than that to restore full employment.
Right now we are barely treading water when private sector job creation is less than 100,000 jobs a month.
3. You mentioned the loss of state and local government jobs. The Senate just approved measures to give aid to the states. What will this do?
July was the beginning of the fiscal year for most states and the latest round of budget cuts that they have had to make showed up in the ominous decline in state and local government jobs. The aid approved by the Senate can really help. Preserving state and local government jobs, including teaching jobs, is important in and of itself, but the money those government workers spend gives an economic boost to their communities as well.
4. What else can we do to give the economy a further boost?
First, the House should quickly approve the state fiscal relief measures that the Senate just passed.
Congress doesn’t seem to want to do much more because they are worried about budget deficits. One way to kill two birds with one stone is to let the tax cuts for upper income households enacted by President Bush expire so they don’t keep adding to the long run budget deficit and then to use the savings in the first year or two for measures that can effectively stimulate the economy.
5. What should those measures be?
Here are three:
- Instead of providing a tax cut for the very wealthiest tax payers, we should provide a tax credit for large and small businesses that hire more workers,
- We should continue extra weeks of unemployment benefits beyond their scheduled expiration date in November, and
- We should extend the TANF Emergency Fund now scheduled to expire in September that states and localities are now using to help create some 240,000 subsidized jobs in the public sector and in the private sector.
Thanks for joining me, Chad.