“As America’s head coach, President Obama needs to make some big and smart adjustments to jump-start economic growth and business investment, stimulate job creation, and get wages up for ordinary Americans.” –Harold Ford Jr.
Because the current game plan has been losing us the game for years. In his remaining months occupying the Oval Office, the president is championing 75 consecutive months of job growth under his watch with great pride. However, that stat comes attached with a lot of fine print – one of which is last Friday’s miserable labor report that showed only 38,000 jobs were created in May.
Sure, jobs have been created every month for the last 75 months. The fine print: during that period from the beginning of 2011 through today, job growth has been stuck in a range between 330,000 and 38,000 new jobs per month. There has been no recognizable uptrend of job growth; more like job stagnation.
And sure, the unemployment rate fell to a low 4.7%. But in the span from 2006 to 2015, the number of people who have left the labor force has risen solidly from 77 million to 93 million. While unemployment might appear under control, the real catastrophe is this 20% rise in the amount of people who have thrown their hands up and ceased trying to find work altogether.
Population growth hasn’t come close to keeping up with the labor force’s rapid contraction. In the same time span, the number of Americans has grown from 298 million to 321 million, precisely a 7.8% rate. Simple math will tell you an American workforce shrinking 2.5 times faster than the population is growing is not a path to prosperity by any means.
Contrary to those who believe Obama when he claims the country “is better off by every economic measure” since he was sworn in, the economy’s in the dump. A broader picture beyond a single month’s jobs report reveals America’s feeble economic state, which contains many alarming trends.
With the labor force contracting, it’s understandable as to why the president is anxious to close the country’s growing economic gap so poorer citizens can get ahead. Enter Wall Street’s wrath: volatile commodity prices have certainly taken its toll there as much as it has on Main Street over the last two years. The difference is the wealthy can easily weather these storms, but the loss of mining and oil drilling jobs have cost many a worker and his family their livelihood.
On top of that, we’ve got three in four Americans living paycheck-to-paycheck and have no money to save and/or invest. And for the one that is fortunate enough to have extra cash, there’s really no place he or she can safely invest for a return on that money. We have banks who have barely paid interest out since the 2008 crisis (some countries’ central banks set negative interest rates which means you, the client, have to pay the bank to hold your money if that hints at how the world economy is doing), we have 10-year government bonds yielding a measly 1.68%, and we have a risky stock market that has reached a peak on multiple recent occasions.
U.S. GDP growth has also trended down since 2000, consistently making lower highs and lower lows. Why, we just found out that U.S. GDP rose a mere 0.8% in Q1 2016. China and India have been trouncing us on the GDP front, clocking in at 7, 8, sometimes 9% annual growth. Meanwhile, under the Obama presidency, our GDP has failed to grow more than 3% in any of those eight years.
There are also longer-term employee trends that signal serious problems. In the investment banking industry, Goldman Sachs, JP Morgan, and others just got swamped with a record 250,000 applicants for unpaid summer internships, many of them undergraduates. Yet the industry can only say “yes” to 2% of applicants or less.
If it means busting your butt at university, going deep into debt, risk being part of the 98% who get sent packing, and if you’re lucky, put in full-time work without earning a dime for three months, all in hope of seeing the light at the end of the tunnel that is paid employment, anyone will do it in a heartbeat.
Which brings us to where we are today. Yes, very few can get a schnazzy New York line of work, and they don’t have much to worry about. There are certainly plenty of people out there who can and should enter the workforce instead of throwing in the towel.
But for the many Americans who truly feel the deck is stacked against them, their pessimistic sentiment is legitimate. It’s no wonder why the economy is voters’ number one concern this election cycle. Many have lost hope of ever finding a job. And if you want to give being your own boss a shot, good luck navigating all the regulations in a country ranked only the 46th easiest to start a business.
The current playbook has been making America the losing team for too long. This country needs to grow again, and it’s crunch time to make that happen.