Jobs Report Underscores Bad Economy

It doesn’t take the monthly jobs report to show that business is struggling. Small business owners know that from experience. And while July’s report was a lot better than the past few months, it’s not enough.

On Friday, the Bureau of Labor Statistics released the July jobs report. We saw 163,000 new jobs last month, a big step up from May and July, when job creation was under 100,000. But there are a few problems even there.

People attend an April job fair in Portland. (AP Photo)

First, the solid number for July came partnered with revisions for the previous two months’ reports — and the already-bad May and June numbers suddenly became even worse.

May was revised slightly upward, from 77,000 to 87,000. But June was docked from 80,000 to just 64,000 jobs. On the whole, job creation estimates from those two months went down 6,000 jobs.

Second, other important indicators were bad. The official unemployment rate climbed back up to 8.3 percent. That is a lot of Americans struggling. More importantly, the labor force participation rate declined to 63.7 percent. That means that only 63.7 percent of working age Americans count themselves in the labor force.

Unemployment might be “only” 8.3 percent, but millions of Americans have simply dropped out of the workforce entirely — it’s no longer worthwhile to even try.

Finally, while 163,000 jobs created in July might sound good compared to what we’ve seen in recent months, it really isn’t that great. Economists say that we need 120,000 jobs every month just to keep up with population growth!

Vice President Joe Biden predicted in 2010 that the U.S. would be creating between 250,000 and 500,000 jobs in a month during the recovery. Since then, we have had exactly four months with more than 250,000 jobs created: May 2010, April 2011, January 2012, and February 2012. Since that prediction, we have created even 150,000 jobs — a much lower bar and barely above the break-even point — in just 12 out of the 28 months.

And for small business, the news is even worse. The National Federation of Independent Business released its survey results for July’s job growth in small businesses, and found that growth was actually negative. Barely negative, but still negative.

Entrepreneurship and small business have to be the engine of real economic recovery. It’s critically important that we encourage people to pursue their dreams and discover the joys of entrepreneurship. If we incentivize hard work, passion, and innovation, we’ll get more of it. And right now, we need a lot more.

Fran Tarkenton is the Founder and CEO of OneMoreCustomer.com, a web resource for Small Business Advocacy and Education. After his Hall of Fame football career, Fran had a successful career in television and then turned to business. He has founded and built more than 20 successful companies and now spends his time coaching aspiring entrepreneurs. Read more reports from Fran Tarkenton — Click Here Now.