In the wake of Friday’s employment statistics showing the
largest jump in non-farm payroll since April 2000, John Kerry said
the job creation was “welcome news for America’s workers.”
“I hope it continues,” said Kerry. Does anyone believe him?
The sluggish payroll survey, after all, was the economic
indicator that Democrats had clung to like a security blanket to
pronounce President Bush’s economic policies a failure. Since last
May, when the tax cut was passed, the Dow is up about 20% and the
NASDAQ up about 30%. Unemployment dropped from 6.1% in May to 5.7%
as of last Friday’s release.
The unemployment figure comes from the household survey, where
the Bureau of Labor Statistics calls people and asks about their
state of employment. The payroll figure comes from a survey of
companies. In September, the New York Federal Reserve released a
study concluding that many firms had taken the recession as an
opportunity to increase efficiency, and therefore the usual pattern
of cyclical rehiring was disrupted: a huge portion of jobs that had
been lost would not come back, and job growth would instead come
from new and dynamic enterprises. It’s no surprise, then, that the
payroll survey, which primarily consists of large and
well-established firms, would lag behind the household survey.
A by-now well worn argument against the household survey is that
it omits “discouraged workers” who have stopped looking for jobs
and dropped out of the labor force. To the extent that that
phenomenon was real, it has stopped and reversed itself: The
household survey on Friday showed a growth in unemployment of
one-tenth of one percent from February to March, and people
entering or re-entering the workforce (call them encouraged
workers) accounted for 98.4% of the increase.
Not only did 308,000 new jobs show up on the payroll survey for
March, estimates for earlier months were revised upward for a total
of 513,000 new jobs in the first quarter of this year (and 675,000
since the tax cut passed in May). At this rate, the proverbial two
million jobs lost will have almost all returned by year’s end —
most of them, of course, before election day.
Unemployment hasn’t moved an election since 1982, when it
reached 10.8%. The first President Bush hemorrhaged votes in 1992
not where unemployment was particularly high, but where real estate
prices had tanked. With half of Americans now holding stock, either
directly or in retirement accounts, equity markets are probably
more important, politically, than labor. But employment figures
still pack a rhetorical punch, and Democrats have used them to
great effect.
Now, though, John Kerry is reduced to arguing not that jobs
aren’t coming back, but that no recovery is enough, and that the
economic policies that he promises — which the National Taxpayers
Union calculates now include $2.76 trillion in new
spending over the next 10 years — will bring even more jobs even
faster. Kerry’s economic critique will only strain credibility more
and more as the months pass.
The conventional wisdom up until now seems to have been that the
economy is a political liability for President Bush and
congressional Republicans. That can no longer be assumed. With
numbers like these, the GOP should not be afraid to go on
offense.
