The economy reversed the trend of the past three months by creating 271,000 new jobs. The overall unemployment rate is now at 5%, a seven-year low. Growth was especially strong in the service sector, with professional and business services (up 78,000) and health care (45,000) leading the way, followed by retail trade (44,000) and food services and drinking establishments (42,000).
The disappointments were no growth in manufacturing, no declines in long-term unemployed and no evidence that those who have given up on finding a job are reentering the labor market.
So overall three cheers for October! But perhaps it is time to get out of the waiting game each month to see if by chance the economy and labor market had a good or bad month (we are terrible at predicting the numbers, considering those who tried thought the October number would be 170,000 or so).
It is time to stop reacting to the monthly numbers and get proactive. Why not set a bold but realistic target to create the number and quality of jobs America needs for the long run?
Time for a jobs target
In 1961 President John F Kennedy mobilized the country around his pledge to put a man on the moon by the end of the decade. In doing so, he energized the public, Congress and the private sector to work together to achieve this goal.
We ought to do the same now by setting a target to create 12 million high-quality jobs by the end of this decade.
That is easily doable: the 12-million target translates into 250,000 per month from January 2016 through December 2019.
Meeting this target, however, would require a proactive effort from the president, Congress, Federal Reserve, business, labor and our schools, exactly the type of collaboration the American public is calling for in this election cycle.
The Fed’s tired of waiting…
The conventional economic advice at the moment might be to urge the Federal Reserve to once again defer on raising interest rates.
That is probably sound advice, but I’d rather have the Fed say, wait a minute, we’ve done our part to support the recovery. It’s time Congress, the White House, and the private sector play their roles.
The timing is perfect for Congress and the president to lead the way. The new speaker of the House, Paul Ryan, has a transportation bill on his desk that could be transformed into a broader infrastructure investment vehicle that would garner strong business and labor support.
He in turn could challenge business and labor to put their own money where their mouths are and commit to jointly funding and overseeing a national infrastructure investment fund. In the spirit of a new beginning, he and the president could sit down (maybe over a good beer brewed in Wisconsin, Ryan’s home state).
They could also set long-term budget targets for investments in basic research, for expanding the number of initiatives aimed at building the next generation of manufacturing industries and for investing in education and training to fill what industry says is a coming – and in some sectors current – middle skills and technical talent shortage.
Getting the message
Setting these targets would have both immediate substantive and signaling effects on private sector decision makers. Business would get the message that good opportunities lie ahead and would start expanding capacity and investments in product development.
Labor could be encouraged to expand existing apprenticeships and work with industry to create new ones fitted to emerging technologies and occupations. Technical colleges and universities could be challenged to expand their classroom, online and cooperative and internship programs to provide the next generation workforce with the skills industry will need to fill the new jobs.
These schools could be incentivized to reach out to the long-term unemployment with course work and links to employers that remove the stigma they now carry when searching for work.
In short it is time for America to go beyond waiting for the jobs numbers to surprise or disappoint us each month and take the steps needed to produce predictable and sustained growth that meets a consensus target and puts Americans back to work, and perhaps even get wages moving in the right direction again.
So Mr Speaker and Mr President, go have a beer and see what you can do together. If you want, I’ll buy you both a good Wisconsin brew.