NEW YORK (TheStreet) -- Forecasters expect the Labor Department on Friday will report the economy added 175,000 jobs in July, down from 195,000 in June, and the unemployment rate will slip a notch to 7.5%.
The pace of jobs creation has been stronger in recent months; however, a noticeable shift toward replacing full-time workers with part-time employees masks a much tougher market for job seekers. Since January, 833,000 more Americans reported working part time, while 97,000 fewer have full-time positions.
That is not surprising -- a good deal of the new jobs are in the hospitality, retailing and other sectors where businesses may chop up full-time positions to avoid rising health-insurance costs for full-time employees mandated by ObamaCare.
More part-time workers pushes down wages for ordinary workers and is one particularly poignant illustration of a public-policy initiative intended to reduce income inequality that actually exacerbates it.Under more normal circumstances, about 360,000 additional jobs would be needed each month to pull down headline unemployment to 6%, but to attain a truly healthy labor market, many more full-time jobs are needed. Adding in discouraged adults and part timers who want full-time positions, the unemployment rate becomes 14.3%. Slow growth is the ultimate factor behind income disparities. In the second quarter, gross domestic product was up only 1.7%, and on average has grown a paltry 1% since President Obama's reelection. Despite greater optimism expressed by consumers in sentiment surveys, real consumer spending, net of autos, has softened. $200 billion as higher taxes imposed at the beginning of the year have dwarfed sequester spending cuts and severely limited consumer spending on nonessentials. Businesses remain pessimistic and investment remains subpar, dragging down growth. Obama's proposal to tighten up and raise corporate taxes for more jobs programs -- especially given the poor record of his targeted initiatives in alternative energy and vehicles -- only adds to investor skepticism. Long term, the president's proposal to further tax overseas corporate earnings, when other principal nations do not, will motivate more companies to move corporate headquarters and jobs to Ireland and other low-tax jurisdictions. Eaton Corp. (ETN), Sara Lee and many less well-known companies have already done so.
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