The root cause of poor jobs creation and falling real incomes is slow economic growth that has bedeviled both the Bush and Obama administrations. Whereas during the Reagan-Clinton era GDP growth averaged 3.4%, since 2000 the pace has slowed to 1.7%.
After GDP contracted 1% in the first quarter, forecasters' growth expect it to rise at a 3% rate the balance of this year. However, growth in the range of 4% to 5% would be needed to provide the 350,000 jobs required each month to bring unemployment down to pre-financial crisis levels over 3 years.
Holding back growth are the trade deficits with China and Japan, as well as oil. These sap demand for domestically produced goods. Those gaps stem from trade agreements that have exposed U.S. manufacturers to less-expensive imports without opening comparable opportunities abroad for more competitive U.S. enterprises. The U.S. policy of not developing most of its off-shore oil and gas resources is also a problem. Altering those policies to cut the trade deficit in half could easily add another one percentage point to growth.
Additionally, new business regulations -- such as Dodd-Frank and the disincentives to work full-time and hire imposed by ObamaCare, plus higher taxes on entrepreneurs, and now new regulations to reduce carbon-emissions -- raise business costs, slow investment and reduce growth.
Balancing growth with other social and environmental goals is always difficult. However, the choices voters and politicians have implemented in this century are profoundly suppressing wage levels and the number of jobs the economy creates.
Additional stimulus from the Fed can't overcome those constraints and create jobs, and inflation heating up will require it to raise interest rates by mid-2015.
Peter Morici is an economist and business professor at the University of Maryland, national columnist and five-time winner of the MarketWatch best forecaster award. He tweets @pmorici1.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.