Why Is The Jobs Market Growing So Slowly?

A few nights ago, Ken explained-- via economist Dean Baker-- how "politicians are using old superstitions and deliberate lies to scare people away from the sort of fiscal stimulus that would get the economy back on track." And that, more than anything, is the bottom line of the slow recovery in the real economy.

Roland just got back from Maine-- a trip that included a lot of driving and a lot of talk radio. He just informed me that talk radio is pushing a GOP talking point big time: the slow growth economy is the fault of Obamacare because prudent small businessmen aren't hiring full-time employees who would be eligible for healthcare benefits. Sounds reasonable, right? Except it's not the reason for a slow growth in job numbers. Catherine Rampell at the NY Times has a much more plausible explanation, one the Republicans and their talk radio spokesmen ignore: the sequester-- at least in some sectors of the economy.

State and local governments have been shrinking-- and shrinking fast-- and, in line with America's plutocracy, there are far less opportunities for employment at the federal level as well. In the last 4 months alone, the federal government laid off 40,000 workers. If you wondered why bloggers like Ken and I have been upset by Obama's Wall Street-friendly-- to putit mild ly and politely-- economic team, this has a lot to do with it.

[I]n every month starting in February, when agencies perhaps started preparing for the sequester, the number of reluctant federal part-timers has been higher than its level in 2012. In each of those months in 2013, the level has also been higher than in 2011, with the exception of April, when there were an equal number of federal part-timers for economic reasons in 2011 and 2013 (64,000).

And of course, these figures show only what’s happening with federal workers. There are plenty of private-sector workers whose jobs and hours depend on federal money, too, as I wrote in an article last week.

In that article, I calculated which industries were most reliant on federal defense money, based on Labor Department data showing where the Defense Department spends its money, and how money spent in any one sector affects employment in all the others (for example, employment of metal workers might rise when the government orders a new jet). The top five defense-sensitive industries are ship and boat building, facilities support services, aerospace product and parts manufacturing, scientific research and development services and electronic instruments manufacturing (which includes companies that make navigational instruments, for example).

Here’s a look at the monthly change in employment in these defense-sensitive industries, shown at an annualized percentage growth rate, versus all other industries:

Source: Bureau of Labor Statistics. Numbers are seasonally adjusted, and change is expressed at an annual rate. May is the most recent month for which seasonally adjusted data are available for the smaller defense-sensitive industries.

As you can see, in the last few months, the defense-sensitive industries have been shedding jobs, while the rest of the country’s employers have been adding jobs over all. The trends for the previous months are noisy, but if you smooth them out, it looks as if the defense-sensitive industries and the other industries were both doing about equally well, with the exception of a huge downward spike in employment in the defense-sensitive industries around the time of the summer 2011 debt ceiling crisis.