WASHINGTON – As lawmakers battled over tax rates and budget cuts, 155,000 Americans found work in December, according to the latest jobs report from the Labor Department.

The gains were right in line with the average of 153,000 jobs added per month in 2012, indicating slow, steady growth in the economy. Even though the national unemployment rate also held steady at 7.8 percent, the jobless rate for Blacks jumped nearly a percentage point from 13.2 percent to 14 percent in December.

Even though most economists agree that the limited survey size used to calculate the Black unemployment rate accounts for much of the volatility in the measurement month to month, the rate still remains much higher than the national rate.

As for the national unemployment rate of 7.8 percent, Heidi Shierholz, economist for the Economic Policy Institute, said that the Labor Department’s recent report was a clear indication that the job growth is just enough to hold us steady keeping up with the growth in the working-age population. EPI is a nonpartisan think tank focused on the needs of low- and middle-income workers.

“This report capped off 2012 in such a symbolic way,” said Shierholz. “It’s just status quo.”

Steven Pitts, labor economist at the Center for Labor Research and Education at the University of California, Berkeley agreed.

“The jobs figure shows a consistent, decent path but not a strong path. We’re not in danger of going backwards right now, but in this current situation it’s going to be a long time before we see lower unemployment numbers,” said Pitts.

The unemployment rate for Black men was 14 percent in December 2012 an increase from the 13.2 percent rate in November and more than double the 6.2 percent unemployment rate for White men in December.

Meanwhile, the unemployment rate for Black women climbed to 12.2 percent in December from 11.5 percent the previous month. White women experienced a slight uptick in their jobless rate from 6.2 percent to 6.3 percent, which matched the unemployment marks in September and October.

The average jobless rate for Blacks in 2012 was 13.8 percent, a two-point decrease from the 2011 average of 15.8 percent. Despite the improvement, the average unemployment rate for Blacks last year was nearly twice the 7.2 percent average unemployment rate for Whites during the same period.

Experts say that the American economy needs to recover nearly 9 million jobs and shave nearly 5 points off the Black unemployment rate and about 2.5 points off White unemployment rate to return to pre-recession levels.

After missing their self-imposed December 31 deadline, lawmakers cut a “fiscal cliff” deal that preserved 82 percent of the Bush tax cuts and kicked the debate over sequestration down the road two months. The recent deal could lead to further contraction and grind the already slow recovery to a halt.

The payroll tax holiday, which affected Americans making roughly $113,000 or less a year was largely ignored in the final budget deal that narrowly avoided the tax hikes and sequestration associated with the “fiscal cliff.” Lawmakers allowed the payroll tax holiday to expire while extending unemployment insurance benefits for an estimated two million people.

Researchers from the Center of Budget and Policy Priorities, which studies fiscal policy and public programs that involve low- and middle-income families and individuals reported that extending the payroll tax “would cost $115 billion” and “boost the economy by $100 billion.”

In comparison unemployment benefits will cost an estimated $40 billion and inject nearly $60 billion into the economy in 2013. The payroll tax which partially funds social security benefits will increase from 4.2 percent to 6.2 percent.

“It’s going to be a drag on job growth,” said Steven Pitts of the University of California, Berkeley. “What’s driving the economy in the short term is people spending money.”

Shierholz said that the expiration of the payroll tax holiday hits poor people harder than rich people, because for people that are struggling and living check to check that two percent could mean choosing between a gallon of milk or buying gas that week.

“The family that was using the payroll tax holiday money to meet necessities won’t have that money to spend, so there’s less money going into the economy. That means lower demand for goods and services and that costs jobs,” said Shierholz.

Shierholz suggested that the American economy needed more stimulus spending to generate economic activity not less.

“Discontinuing the payroll tax holiday goes in the opposite direction,” said Shierholz. “This is austerity and it will cause the recovery to slow further than it otherwise would have.”
By Freddie Allen
NNPA Washington Correspondent