June job growth was a healthy 222,000 . . . but we can do better

We talk about this every time there's a job report, and we'll probably always talk about it because most people don't really have a proper frame of reference for how many new jobs qualifies as a lot. Anything with six figures sounds like a lot, and the Obama Administration would often claim "robust" job growth of 100,000 or so in a given month. That's not actually robust at all, but most people don't know that it takes nearly 200,000 new jobs in a month just to keep pace with growth in the population and the workforce. So how good is the news that we produced 220,000 new jobs in June? It's good news. It's not earth-shatteringly great news. But it's good, and we shouldn't sneeze at good:

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After a slow three-month stretch, the latest jobs report from the Bureau of Labor Statistics offered some positive signs. Job gains of 222,000 beat economists’ forecast for 179,000. The unemployment rate inched higher to 4.4% from 4.3%, although more people were actively looking for work during the month. The labor force participation rate was 62.8%, up from 62.7% in May. Average hourly earnings grew 0.2% to $26.25 an hour. Also, job growth in April and May was stronger than initially reported. The U.S. added 207,000 jobs in April, an upward revision of 33,000. The May jobs report booked an extra 14,000 net new jobs, bringing the month’s total to 152,000. While job growth picked up, economists see more room for improvement in wages and participation in the workforce, which have been slow to keep pace. Wages faced some downward pressure in June from an increase in government jobs.

Inching along at just above 200,000 new jobs per month is better than going backward, but the real opportunity is the labor force participation rate. The fact that it ticked up one-tenth of 1 percent is a decent start on a number that needs to get much, much better.

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Labor force participation remains at the lowest rate since the Carter Administration because Obama economic policies disincentivized work, capital formation and productivity. It became easier not to work because it was easier to get things like food stamps and subsidized health insurance. It also got harder for companies to hire you because Obama policies artificially jacked up the cost of labor. One of the most underappreciated imperatives for the Trump Administration is to reverse these disincentives and get people who've dropped out of the workforce to get back in it. If that happens, you'll see more new jobs created because one of the obstacles to new job creation is the ability to fill those positions. This is harder than you realize for a lot of employers because there aren't enough qualified people applying for them. Getting people back into the workforce won't solve that problem instantly, since they will have to get re-acclimated to working regularly, but over time it will result in a healthier raw number of people working. You might see the U-3 unemployment figure tick up a little bit when this happens, since those seeking to re-enter the workforce count as unemployed. But the 4.6 percent we're seeing now is artificially low anyway. If we can drive labor force participation back toward 70 percent - and ideally even higher than that - you'll start to see monthly job creation numbers more like 300,000 or better. That's when we're really rolling. And yes, our economy is capable of doing it if we're putting capital into productive pursuits. The federal government can change incentives to make that happen, and it needs to. The private sector can do the rest simply by making rational choices about where it puts the newly freed-up capital. Today's report is worth one cheer. Maybe even two. But lose sight of the work that still needs to be done. Getting rid of Obama was necessary, but it's not nearly sufficient.

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