Job Growth and Economic Recovery
Odds for rebound are better without government intervention

While most leading economic indicators in the U.S. continue to point upward and few can deny that a robust economic recovery is underway, Americans are understandably confused by federal statistics on unemployment. That confusion may be attributed to the fact that the federal government publishes not one but two separate job surveys with very different conclusions.

The old way of measuring job creation measure payroll employment for businesses nationwide and is published in the Bureau of Labor Statistics’ Establishment Survey. The newer government survey, which includes job creation in self-employment and entrepreneurial jobs, is called the Household Survey.

While the Establishment Survey shows a decline in payroll jobs since the recession ended in November 2001, the Household Survey indicates 1.9 million jobs were created in that period. A story in April’s issue of the American Spectator points out that the real job growth of the past two decades is not only in business payrolls but significantly in self-employment and entrepreneurial jobs that are not counted in the Establishment Survey. They are counted, however, in the Household Survey, which, according to American Spectator, more accurately reflects the job picture. Self-employment has represented an ever larger percentage of post-recessionary job growth. Of all job growth since the end of the last recession, 31.1 percent has been in the category of self-employment.

In spite of the loss of manufacturing jobs, the U.S. job market is growing. Historically, job losses in one economic sector have inevitably been followed by creation of jobs in other sectors. Two cases in point illustrate that manufacturing job loss is not necessarily symptomatic of a declining economy: the U.S. economy and the economy of China.

Loss of manufacturing jobs in the U.S. exists simultaneously with a growing, robust economy. Syndicated columnist Stephen Chapman reported in February that China has lost 15 million manufacturing jobs between 1995-2002 and yet its economy is among the fastest growing in the world. These interesting and conflicting aspects on the issue of the global economy keep economists employed and the population puzzled.

China, a developing nation with abundant cheap labor, is an exporting behemoth. At the same time, it is also importing more and more products and losing manufacturing jobs. Yet, it’s economy is rapidly expanding.

The U.S. has a trade deficit in manufactured trucks, cars, TVs, office machines and automatic data processing equipment. However, the U.S. retains a trade surplus in airplanes and airplane parts and a myriad of agricultural products. Its economy is expanding faster than the economies of other Western nations.

Each February, Charles McMillion of MGB Services compiles an annual index from the Bureau of Labor Statistics. According to McMillion, “state and local governments have added 600,000 workers in three years. Some 21.5 million of us now work for state, local and federal governments – one in six Americans, seven million more worker than we have employed in all of manufacturing.” This is a troubling statistic indeed, because governments cannot create wealth like the private sector; they can only use up the wealth created in the private marketplace.

While the manufacturing job decline is noteworthy, our economy seems in better shape than critics believe and aggressive government intervention is unwarranted. Thomas Jefferson warned, “The natural progress of things is for government to gain ground and for liberty to yield.” As time marches on, our nation’s founders prove more and more wise. In the final analysis, limited government and liberty must trump all other issues.

Complaining Americans, who are exercised over job outsourcing and are looking for someone to blame, need only to look in their own garages to see if their automobile was manufactured in the United States.

Pat Freibert is a former Kentucky state representative from Lexington
editorial@lanereport.com

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