Sluggish Job Growth Continues

NEW YORK (TheStreet) -- On Tuesday, the Labor Department is expected to report the economy added 185,000 jobs in September and unemployment was steady at 7.3%. Part-time positions dominate the jobs picture.

Since January, 848,000 additional Americans have reported working part time, while only 35,000 more say they obtained full-time positions. In significant measure, the part-time economy is driven by Obamacare health insurance mandates, which push down wages in industries such as retailing and restaurants and widen income inequality.

September data predate the government shutdown, and the closure won't have much of an impact on employment several months from now. About one half of one percent of employed workers was furloughed for about two weeks. After the Clinton-era shutdown, the economy recovered lost ground quickly and the shutdown had hardly any lasting effects on retail sales.

Government workers will receive and spend back pay, and many tourist dollars not spent at government-run museums and parks, for example, were spent in other places.

Unfortunately, hardening business expectations for permanently slower growth and more burdensome regulations are changing labor market and social conditions.

These days, most new growth is concentrated in the auto, housing and on-shore oil and gas sectors, while the rest of the economy languishes. New college graduates often work at unpaid internships, while taking part-time jobs at places such as Starbucks ( SBUX) to meet minimal living expenses. They put off marriage and childbearing, which also drags on consumer spending and growth.

Adding discouraged adults, who have quit looking for work altogether, and part-timers who want full-time employment, the unemployment rate is close to 14%.

Second-quarter gross domestic product advanced 2.5%, but third-quarter estimates, also unaffected by the shutdown, are expected to show growth slowed to about 1.8%.

Even with more full-time positions, the pace of jobs creation is well short of what is needed. About 360,000 additional jobs a month would lower unemployment to 6% over three years, but that would require GDP growth in the range of 4% to 5%.

Stronger growth is possible. Four years into the Reagan recovery, after a deeper recession than President Obama inherited, GDP was advancing at a 5.1% annual pace, and jobs creation was robust.

Unnecessary oil imports and trade deficits on manufactured products from China and other Asian countries tax demand for U.S. goods and services, slow growth and subtract more than 4 million jobs.

Absent U.S. policies to develop readily available oil offshore and in Alaska, and effectively confront Asian governments about purposefully undervalued currencies and protectionism, the trade deficit will continue to steal growth and American jobs.

Dodd-Frank regulations make mortgages and business loans more difficult to write -- especially for struggling regional banks that serve small and medium-sized businesses. The recovery in housing construction, though welcomed, is lackluster compared with past economic expansions. In turn, that slows expansion in building materials, major appliances, furniture and other durable goods.

The high cost and slow pace of regulatory reviews are constant business complaints and curb investment spending, and Washington shows no signs of listening.

Just as excessive bureaucracy tied in knots the Affordable Care Act health insurance exchanges, the burdens imposed by Obama-era regulations targeted on private businesses far exceed dollar outlays for compliance. Those slow down new investments to the point that businesses look to China and other Asian locations for a workable environment.

Regulatory assessments needed to protect consumers and the environment must be timely and at minimum cost to add genuine value. Otherwise, excessive bureaucracy sends jobs to Asia and imposes great social costs.

Absent smarter energy, trade and regulatory policies, slow growth and high unemployment are becoming permanent.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.

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