Treading water: That’s the best way to describe the June employment report, but that’s not good enough considering the state of the labor market.
The Bureau of Labor Statistics found that the economy improved little over the past month. Net employment grew by just 80,000 — roughly in line with population growth. Consequently, unemployment (8.2 percent), labor-force participation (63.8 percent) and the employment–population ratio (58.6 percent) all remained flat. The amount of time the jobless spend out of work did not change much either. Average hourly wages rose—by six cents.
Job growth was weak across the economy. Temporary help services posted the largest job gains (+25,000), followed by professional and technical services (+18,000) and accommodation and food services (+14,000). Both manufacturing (+11,000) and health care (+13,000) increased employment. Conversely, payrolls fell in information services (–8,000), retail trade (–5,000), and government (–4,000). Another month passed with little reduction in the number of unemployed Americans.
If the economy continues to grow at this pace, Americans will have to get used to French levels of unemployment. This appears to be the path President Obama wants to follow. He has strongly resisted efforts to prevent Taxmageddon from hitting potential job creators on January 1. On top of the individual mandate — or “tax” — Obamacare imposes a new 3.8 percent tax on capital-gains and dividend income and increases the Medicare payroll tax. If the 2001 and 2003 tax laws expire — as Obama insists — the new top capital-gains tax rate will be 23.8 percent, over 50 percent higher than the current level. The tax on dividends will almost triple from 15 percent to over 43 percent.
These are taxes on investment; businesses have to take them into account when planning for the future. More small-business owners identify high taxes as their single greatest problem, bigger than anything else — including poor sales. Higher taxes on entrepreneurs, investors, and job creation will not get the economy above water.