Recession 2013 Looks More Likely After Weak Jobs Report

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Every politician promises "more jobs" for the American people. This has been the foundation of virtually every speech at the conventions for both parties.

But what we really need are "more quality jobs" - especially if we want to steer the country away from Recession 2013.

Unfortunately, quality jobs don't seem to be around.

Last Friday's U.S. jobs report showed that only 96,000 new jobs were created in the United States in August when 130,000 were expected. That's dismal enough, but a closer look at the numbers shows just how bad U.S. unemployment is.

Turns out the biggest job increases have been in food services and drinking places, which added 28,000 jobs in August and 298,000 over the past year.

MIT labor economist David Autor said posting gains in areas like these doesn't translate to sustainable, quality job growth.

"They're numerous, but they don't tend to be highly paid," said Autor. "They don't have a lot of job security."

What the U.S. Jobs Report Tells Us

Finding quality employment has not been the reality in the marketplace for a huge segment of the working age populace in the United States.

At present, there are about 40 million Americans who lack higher education but desire a middle class lifestyle. The U.S. economy has not been creating the jobs traditionally associated with this labor force in factories and other manufacturing facilities.

The U.S. is still the number one manufacturer in the world, but there are now as many people working in this industry in the United States as there were at end of the Depression, even though the population is twice as large. As one article noted about the entrenched unemployed in the United States, there are not the "wide-open job opportunities" of the factories and other institutions of the past.

From 1999 to 2009, factories in the United States shed so many workers that the increase in employment of the previous seventy years was all but eradicated.

What is replacing positions such as those are ones in the service sector.

According to Karen Everage, Director of the Toledo Restaurant Training Center, classes training chefs have witnessed a tripling in enrollment. Toledo, the Midwest heavy industry home of such manufacturing stalwarts as Dana Corp. and Owens Corning, now sends its workers into food service careers from those running factories.

About this, Everage observes that, "We are in food-service business and everyone has to eat."

While about 70% of the U.S. economy emanates from service-based sectors such as restaurants and tourism, those are not the positions that sustain a world-class economy.

These are not recent concerns.

U.S. job creation began to slow down around 2000. That is when the great decline in manufacturing employment started.

Harvard Business School Professor Michael Porter advised that, "There's something structural here, because it started before the recent downturn. Moreover, we and others discovered that virtually all of the net new jobs created over the last decade were in local business...government, healthcare, retailing...not exposed to international competition. That was a sign that the U.S. was not doing well in businesses that have to compete internationally."

Much of the economic growth of the United States after the recession in 2000 that occurred before the onslaught of The Great Recession was related to the housing market. As The Great Recession has clearly demonstrated, that was a result of a low interest rate bubble rather than fundamental economic demand.

Compounding the effects of The Great Recession has been the misappropriation of the funds from President Obama's stimulus package. Much of the almost one trillion dollars expended went to bolster state and local government workers, those "local business" jobs noted by Porter.

Lower Workforce Participation

Participation in the American workforce peaked in 1997.

In addition to higher unemployment in the United States in recent years, there have been millions more applying for disability income so as not to have to work. This is having a profoundly debilitating effect on the U.S. economy.

According to Porter, "workforce participation is critical to prosperity because the more people who work as a proportion of the total working age population, the higher per capital income will be whatever the wage level."

Instead, the level of workforce participation is declining in the United States. The new ones being created are not the "good jobs" that politicians promise. While every job has dignity and merit, what is lacking is a future that promises security and relative prosperity.

About this, Professor Michael Porter lamented, "We should have been worried before The Great Recession."

Also, wages after inflation have fallen by 1.6% during the Obama administration. During the Bush administration, wage growth registered in at 2.5% higher. Also telling about the jobs outlook is that the number of long-term unemployed Americans is twice the amount as when Obama took office in January of 2009.

These dismal signs of low quality job growth and lower salaries make Recession 2013 seem like a certainty.

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