Weak Job Creation

By Isaac Cohen*

The Labor Department delayed report on job creation in September was disappointing. Even before the government shutdown and the debt ceiling confrontation, only 148,000 new jobs were created in September and the unemployment rate decreased from 7.3 to 7.2 percent. Next month, when the effects of the government shutdown will be taken into account, these figures will be even worse.

The private sector created most of the new jobs in September, in sectors such as wholesale trade and transportation, even in construction. Also, state and local governments are hiring again. The drag is coming from the federal government, which has been shedding jobs consistently.

Compared to last year, in September employment in the federal government was down 3.1 percent. According to the New York Times, last month, the number of civilian persons employed by the federal government was the lowest number August 1966, when Lyndon Johnson was President. Furthermore, today the federal government employs 2 percent of the civilian labor force, while in 1966 with a smaller population, the figure 4.3 percent.

These figures on government employment confirm the conclusion the central bank has drawn that fiscal policy, what the government receives and spends, is restraining economic growth. A recent study by the research firm Macroeconomic Advisers concluded that fiscal uncertainty has raised the unemployment rate in 2013 by 0,6 percent, equivalent to 900,000 lost jobs.

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC Washington Office.

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