Factoring in adults on the sidelines who say they would seek employment if conditions were better and part-timers desiring full-time work, the jobless rate becomes 12.7 percent and that likely understates the scope of the problem. One in six men between ages 25 and 54 are jobless, and many displaced spouses in formerly two-earner families have become reconciled to permanent unemployment.
The economy needs to add about 340,000 jobs each month to push unemployment down to an acceptable level but that would require GDP growth in the range of 4 to 5 percent. Instead, slow growth and jobs creation pins down wages and frustrates the unemployed and new high school and college graduates.
Over the last four and one-half years, the pace of GDP growth has been a paltry 2.3 percent—about the same as during the Bush expansion. President Reagan inherited a much tougher unemployment situation than Obama, yet he managed 4.8 percent growth and created many more jobs.
The defining difference between the recent two disappointing economic recoveries and the strong record of the 1980s has been the predisposition of presidents from both parties to champion politically-expedient remedies—bailouts and entitlements that steal money from promising R&D, public infrastructure and private investment to bolster inefficient automakers and hospitals, abusive banks and traders, and decadent universities and other non-profits.
In addition, the failure to properly craft and enforce trade agreements with China, Japan and Germany, and to develop oil and gas off-shore and in Alaska has imposed a $475 billion trade deficit and lowers growth by two percentage points a year.
With a lighter but still effective touch to regulation, fewer entitlements that discourage job seekers and employers alike and recognition that America must play its strengths in a globalized economy, well meaning but ill-conceived economic policies will continue to beat down growth and the hopes and dreams of American workers.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He tweets @pmorici1