Why Job Growth Isn't Happening

The economy added only 18,000 jobs in June, after posting a lackluster 25,000 gain in May.  Jobs creation remains moribund and inadequate to appreciably dent unemployment, because the economic recovery is simply not gaining steam.

These weak jobs data indicate the economic recovery remains in low gear, and policies other than big deficits and printing money are needed to get Americans back to work.

Health care, retail, and manufacturing posted modest gains.

Construction, especially hurt by the weak housing market and tight state and local budgets, lost 9,000 jobs.

Temporary employment is falling, indicating growing business pessimism.

Government employment fell by 39,000, and private sector jobs growth was 57,000.

Unemployment rose to 9.2 percent, as jobs creation continues to lag labor force growth. Moreover, unemployment would be higher but for the fact that many adults have become discouraged and quit looking for work altogether.

Factoring in those discouraged workers, and others working part time but would prefer full time employment, the unemployment rate is 16 percent.  Adding college graduates in low skill positions, like counterwork at Starbucks, and the unemployment rate is closer to 20 percent.

The economy must add 13.7 million jobs over the next three years-382,000 each month-to bring unemployment down to 6 percent. Considering layoffs at state and local governments and likely federal spending cuts, the private sector jobs must increase at least 400,000 a month to accomplish that goal.

Growth in the range of 4 to 5 percent is needed to get unemployment down to 6 percent over the next several years.

Jobs creation remains weak, because temporary tax cuts, stimulus spending and large federal deficits do not address structural problems holding back dynamic growth and jobs creation-the huge trade deficit and dysfunctional energy policies.

Oil and trade with China account for nearly the entire $525 billion trade deficit. This deficit is a tax on domestic demand that erases the benefits of tax cuts and stimulus spending.

Simply, dollars sent aboard to purchase oil and consumer goods from China, that do not return to purchase U.S. exports, are lost purchasing power. Consequently, the U.S. economy is expanding at about 2 to 2.5 percent a year instead of the 5 percent pace that is possible after emerging from a deep recession and with such high unemployment.

Without prompt efforts to produce more domestic oil and redress the trade imbalance with China, the U.S. economy cannot grow and create enough jobs.

Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former Chief Economist at the U.S. International Trade Commission.