Issue of the week: More jobs and a skittish market

Let’s have some perspective on the latest jobs report, said Matthew C. Klein in Bloomberg.com. The U.S. Bureau of Labor Statistics reports that 195,000 jobs were added last month, “significantly” exceeding economists’ predictions. On top of that, the government said 70,000 more jobs than previously reported were added in March and April. But “while the news isn’t bad, we shouldn’t be calling it ‘good,’ either.” At this pace, it will still take four more years to reach full employment, leaving us “on track for a lost decade.” And consider what jobs we’re adding. More than half the jobs added last month were in the hospitality and retail industries—sectors that generally pay workers less and offer fewer benefits.

You can blame Obamacare for that, said The Wall Street Journal in an editorial. “At this stage of an expansion you’d expect the number of part-time jobs to be falling as companies do more full-time hiring.” Yet many part-time workers who want full-time jobs can’t find them. It’s no coincidence. Since Obamacare will eventually require companies to provide full-time employees with health insurance or face stiff fines, businesses have an incentive to hire more part-time workers instead of full-time staff. Postponing the employer mandate for a year might spur more full-time hiring, but if the government really wants to encourage job growth, it should “delay the employer mandate forever.”

No one should ever get too worked up over monthly job figures, said Neil Irwin in WashingtonPost.com. But unfortunately the bond market—jittery over the Fed’s plan to phase out its program of bond-buying, or quantitative easing—did just that last week. The latest jobs report sparked “an epic sell-off,” and even though that drives up government borrowing costs, it’s good news in one sense. It shows that financial markets are “taking their cues on when the Fed will end its easing programs by watching incoming data,” instead of overreacting to “a stray comment from one of the 19 Fed policymakers.” Still, investors are way too jumpy. “Markets are in a mode where any comment about unwinding QE, or even a single good jobs number, leads to a dramatic rethinking of the direction of future policy.”

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“This report is going to have no visible effect on Fed policy,” said Felix Salmon in Reuters.com. Companies have already done their borrowing; they’re now “loaded up with cash” to invest in new jobs. So the current and future borrowing rates are “not going to determine the velocity” with which wereduce unemployment. That is now effectively out of the government’s hands. The Fed can do no more to pump up the economy, and federal and local governments are too strapped to create more public sector jobs. As a result, “job growth, from here on in, is entirely going to be a function of the private sector.” America’s flush and profitable companies need to start spending their money to hire unemployed workers. Let’s hope, then, that “corporate growth will mean employment growth.” Because there’s nowhere else for it to come from.