(Special to The Root) — The economy added 114,000 jobs last month, on top of an upward revision of 86,000 jobs to July and August. The private sector has added jobs for 31 consecutive months, and after coming into office in the depths of the Great Recession, President Barack Obama has created more than a million jobs over his first term. For the first time since he took office, the unemployment rate is below 8 percent, hitting 7.8 percent in September.
Meanwhile, the share of African Americans with a job edged up from 52.7 percent to 53.0 percent and the unemployment rate fell to 13.4 percent, after hovering just above 14 percent for the past three months. Among adults ages 20 and over, all of the gains for African Americans were among women. Although the share of black adult women overall employed rose from 55.1 percent to 55.3 percent, the share of black adult men employed fell from 57.7 percent to 57.5 percent. Both adult men and women, however, have seen their employment rate rise over the past year 0.5 percentage points.
It is clear that the American Recovery and Reinvestment Act of 2009, support for the auto industry and other policies implemented by the 111th Congress in 2009 and 2010 were the right path forward. Moving to supply-side economic policies, as Republican presidential candidate Mitt Romney advocates, will not only stymie job creation but also risk pulling the economy backward, since these were the very same policies that got us into the current mess in the first place.
Deficit spending has been effective in boosting job creation. In 2008 the economy began hemorrhaging jobs, and by the winter of 2008-2009, the economy was shedding more than 20,000 jobs per day, more than at any point since the Bureau of Labor Statistics began tabulating these data in 1948. The Recovery Act led to a rapid reversal in the number of layoffs, and starting in March 2010, the economy saw jobs being added each month.
Since February 2010 the economy has added 4.3 million total payroll jobs, which rises to 4.6 million when we include the additional 386,000 jobs created as of March 2012, according to preliminary data from the Bureau of Labor Statistics' annual benchmark-revision process. The Recovery Act not only provided a needed boost to demand but was also the right thing to do for the millions of families left without a breadwinner when the financial industry imploded.
Moreover, during the dark days of the Great Recession, in 2008 and 2009, the U.S. automobile industry looked as if it might collapse. The federal government, however, stepped in and provided $80 billion in aid, with a clear plan for those funds to be repaid. So far, about half of these grants and loans have been repaid, and the automobile industry has added 152,300 jobs since June 2009.
Even as private-sector jobs have grown, however, the decline in public-sector employment is holding our economy back. The economy has lost nearly 700,000 public-sector jobs since April 2009. Our unemployment rate would be at least a full point lower without those losses. Since the Republicans took control of the House of Representatives in 2011, they have blocked efforts to help support public-sector jobs for teachers, police officers and firefighters.
Last month's decline in the unemployment rate was driven by large reported employment gains, with 873,000 people indicating that they got a job in September. This is an exceptionally large one-month gain in reported employment, and therefore we should interpret it carefully. Higher employment is consistent with data from the establishment survey, however, and while the pace of reported employment in the household survey will likely be slower in the months to come, it is clear that employment is rising.
There are other indications that more people are finding employment: The share of those out of work who voluntarily quit their jobs instead of being laid off rose to 7.9 percent, and the number of discouraged workers fell from just more than a million a year ago to 802,000. However, 582,000 people newly indicated that they were working part time because of slack work or business conditions, which means that not all of those finding work are finding the kind of work that they would like to have.
Both men and women reported increased employment, with 67.5 percent of adult men (ages 20 and over) reporting having a job in September — up from 67.0 percent a year ago — and 55.1 percent of adult women reporting having a job — up from 55.0 percent a year ago. Employment grew most for workers with some college or more, while falling for workers with only a high school diploma.
Alongside hiring, wages grew by 7 cents in September for an annualized quarterly rate of growth of 1.6 percent. However, this means that workers are not seeing real earnings gains, since the rate of inflation over the past year — as measured by the Consumer Price Index for all urban consumers — rose by 1.8 percent.
These data show that in the wake of a massive recession caused by a financial crisis like the one we have lived through in recent years, the best antidote to high unemployment is deficit spending until the unemployment rate comes down.
Heather Boushey is senior economist at the Center for American Progress Action Fund.
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