Economy still going too slow

Economy still going too slow

Is the economic glass half-full or half-empty? The numbers provide a case for each argument.

Recent economic statistics are sending a mixed message — good news about job creation and bad news about overall growth and prosperity.

The news was filled with positive reports last week about increases in hiring, so much so it kicked off speculation that the Federal Reserve Board may slow its efforts to stimulate the economy through its bond-buying program.

But let's not get too carried away here.

There's no question that adding 195,000 jobs in June comes as good news. Employers have now added an average of more than 200,000 jobs a month this year. But despite the additional hiring, the unemployment rate didn't budge, remaining at 7.6 per cent.

The casual observer may wonder what's up with that. It seems that more of the previously discouraged workers who had given up looking for a job are back in the job market again. It's a positive sign that some of the unemployed are getting the feeling that things are picking up.

But the greater number of people actively seeking employment has the effect of keeping the overall unemployment rate higher even when employers are hiring.

So the national glacial recovery continues its slow pace. It's even worse in Illinois, which has its own unique set of problems that keeps it trailing behind almost all of the other 49 states.

An improved housing sector accounts for part of the progress on the jobs front. Rising from the depths of the 2008-09 housing market collapse, this vital contributor to economic growth is seeing improvement in home values that will come as much-needed relief to homeowners who found themselves owing more than their homes are worth.

Hiring gains also are reported in the health, retail and hospitality sectors of the economy. Restaurants and bars are responsible for one in 10 jobs.

The biggest disappointment, however, is not just the number of people seeking but not finding employment but those who would prefer to work full time but can find only part-time jobs.

There are more than 8.2 million American workers with part-time jobs who want full-time jobs, and that number just increased by more than 300,000.

In that regard, President Barack Obama's decision to delay his mandate that employers purchase medical insurance for their employees will come as good news. The White House last week announced that, because of unanticipated implementation problems, it will delay enforcement of the employer mandate by a year, from Jan. 1, 2014, to Jan. 1, 2015.

The mandate provides a significant disincentive to employers to bring on new workers. For starters, employees who work at least 30 hours a week will be considered full-time under the Obama mandate, and the requirement was creating a perverse incentive for cash-squeezed employers to limit part-time workers to 29 hours or less.

A second disincentive is that any business with 50 or more employees is required to provide medical insurance for employees. Once again, cash-squeezed firms were left with the option of remaining at 49 employees or less, paying for employee health insurance or paying a $2,000 per employee fine for not providing health insurance.

Requirements like that may not mean much to huge corporations with eye-popping cash flow. But to small businesses just getting off the ground or older firms fighting to remain competitive, they can mean the difference between hiring and firing and closing or remaining open.

Fortunately, the Obama mandate will be delayed. Still, many businesses are loath to bring on new workers, either full- or part-time, that they will be forced to lay off at some uncertain date in the future.

It's good news that more and more jobs are being added. This much-needed tonic is good all around. But significant hurdles remain in the way of re-creating the economic booms of the Reagan and Clinton years that so many wish to see.

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