Following the disappointing jobs reports from March and April, today’s announcement was seen by many as being especially important in determining whether the economy was suffering a temporary hiccup or was experiencing a more worrisome trend. It’s becoming clear that we should start worrying.
While the headline unemployment rate remained essentially unchanged at 8.2%, job growth of 69,000 was well below the consensus expectation of 150,000. The U6 measure of unemployment, which factors in discouraged workers and those that are working part-time for economic reasons, rose from 14.5% to 14.8%, the first increase in this measure for all of 2012. Adding to the worries, job growth in April was revised down from 115,000 to 77,000.
The situation for the black community was even worse. Black unemployment rose from 13.0% in April to 13.6% in May. The rise in unemployment was equally divided amongst black men and women, with each gender seeing their unemployment rate rise by 0.6% as well.
If you feel like you’re getting a sense of déjà vu, you’re probably right. If this slowdown continues, this will be the third straight year that job growth has deteriorated in the spring after many thought the economy had turned the corner in the winter. Compare the last two months, which have averaged 73,000 jobs added with the first quarter of 2012, which saw averages of 226,000, and it is clear that we should be concerned.
The most unfortunate aspect is that, in many ways, the pain that is being experienced is self-inflicted. Europe’s recession is largely due to austerity policies. Following an initial stimulus package in 2009, the US has also pursued deficit reduction at the expense of job creation. And there does not appear to be much relief on the horizon. Instead of spending to help jump start job growth, Republicans and, to a lesser extent, Democrats, are proposing more austerity to come in some form or another. All of this is occurring while the US could borrow at 1.45% in order to invest in ourselves. Any person, business (and in this case, government) would be foolish to not take advantage of that opportunity if it were presented to them, given that the return on that investment would almost certainly be higher than the cost.
Further, if one is worried about future deficits and borrowing costs, there is a clear solution to that as well. As Felix Salmon points out, corporate profits are at an all-time high, accounting for more than 10% of GDP, which is unprecedented. And yet, they still are not hiring. If that’s the case, it’s becoming relatively clear that taxing them more would not hurt job growth, and the increased revenue from a higher corporate tax rate could certainly offset any additional spending by the government to invest in the economy.
Therefore, contrary to what many may say, the problem, and the subsequent solution are not that complex. Instead, the politics are. This leaves two options for the black community: (1) change the climate and the characters in Washington or (2) find the best ways to take advantage of the few bright spots in the current economy. Pursuing both options would be ideal.
People in Europe have increasingly grown weary of political leaders who have doggedly pursued austerity and have voted for those that see more of a role for government in stimulating growth. Voters, but especially black voters who have been disproportionately affected by the jobs crisis, can and should do the same here and hold our government accountable for the lack of response.
Simultaneously, some sectors of the economy are performing better than others, and it is important for African-Americans to do their best to pursue them. For instance, if there is one area which appears to be recession proof, and is therefore consistently hiring, it is health services. Starting businesses and/or preparing oneself for opportunities in this sector, either through education or retraining programs, will dramatically increase one’s chances at finding a job in today’s tough environment. There are a variety of opportunities available depending on education level as well, ranging from physicians to home health aides to medical secretaries.
If Washington is going to continue to put politics and ideology ahead of the well being of our communities, it may be time to look for other solutions, both inside and outside of the government.
Gerald Mitchell is the creator of Power Collective, where he works to support and promote small and socially-responsible businesses. Previously, he worked in community and economic development as an adviser to, and investor in, inner-city small businesses.