In the New York Times, Paul Krugman says the administration needs to do more to promote job growth. “It’s time for an emergency jobs program. How is a jobs program different from a second stimulus? It’s a matter of priorities. The 2009 Obama stimulus bill was focused on restoring economic growth. It was, in effect, based on the belief that if you build G.D.P., the jobs will come. That strategy might have worked if the stimulus had been big enough — but it wasn’t. And as a matter of political reality, it’s hard to see how the administration could pass a second stimulus big enough to make up for the original shortfall.”

Separately, Gary Becker and Richard Posner debate what to do about unemployment. Becker: “It is wiser to cut labor costs in other ways. I fully endorse Posner’s suggestions to cut the minimum wage, but I do not see that happening with the present Congress. My favorite approach it to try to stimulate the economy by cutting income taxes, especially corporate income taxes and other taxes on capital, both physical and human capital. Such tax cuts will stimulate investments in the economy, and in this way increase the demand for workers.”

Personally, I prefer Becker’s approach. That policy option has worked best in the green industry historically.

WALL STREET JOURNAL — In a positive sign for the labor market, the number of U.S. workers filing new claims for jobless benefits decreased more than economists expected last week. Initial claims for jobless benefits fell by 33,000 to 521,000 in the week ended Oct. 3, the U.S. Labor Department said in its weekly report. The last time initial claims were this low was on January 3.

The four-week moving average of new claims, which aims to smooth volatility in the data, also fell by 9,000 to 539,750 from the previous week’s revised figure of 548,750. The last time the four-week moving average was this low was on January 17.

Economists at JP Morgan Chase & Co. wrote in an economic analysis last week that claims generally appear to be on a downward trend, but the pace at which they are falling is a bit sluggish. “The drop has been somewhat slow relative to other large recessions,” the economists wrote last week. “Initial jobless claims have fallen 18% in the 26 weeks since they peaked. In the same time span, jobless claims fell by 23% after the 1975 recession, 33% after the 1980 recession, and 29% after the 1982 recession. Claims are usually a good predictor of employment, and the slowness of their decline could indicate a sluggish recovery in the labor market.”

Mark Perry provides commentary regarding his chart below: From the early April peak of 658,750, jobless claims (four-week average) have fallen by 119,000 (-18%), and that measure of jobless claims has fallen in 20 out of the last 26 weeks. It’s also interesting that in the WSJ article above, the Chase economists didn’t mention the two most recent recessions of 1990-1991 and 2001. During those two recessions, jobless claims fell by a comparable amount, by -15% from the March 1991 peak and by -19% from the October 2001 peak.It’s the pace and strength of the recovery that matter now, particularly whether improvements in gross domestic product translate into increased employment. Until businesses start adding to their payrolls — probably not until next year — indicators tracking the consumer (retail sales) and manufacturers (durable goods orders) will likely remain unsteady. Housing sales (another consumer indicator) have been doing well this year, having gotten a boost from Uncle Sam in the form of the $8,000 federal income tax credit for new home buyers.

The latest numbers, fresh from the Bureau of Labor Statistics:

The unemployment rate went up to 9.7%, reversing the improvement we saw in July. To be fair, “unemployment” is somewhat difficult to measure. For one thing, the way the unemployment rate is calculated doesn’t take into account the people who are no longer looking for work. (You know, the “discouraged workers” we heard about endlessly during the Bush years.) So you could see the economy improve but the unemployment rate actually go up, because more people start looking for work.

Source of graph. Click here for Mankiw’s interpretation of it.

Here’s some economic logic to ponder. The unemployment rate in June for American teenagers was 24% and even White House economists are predicting more teenage job losses. When the minimum wage increases to $7.25 an hour from $6.55 on July 24, it will effectively raise the cost of employing teenagers (and other entry-level workers) once again, thereby exacerbating the situation.

The national wage floor will have increased 41% since the three-step hike was approved by Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That’s a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins.

If Congress were wise and compassionate, it would at least suspend the wage hike for one or two years until the job market recovers. We know this Congress won’t do that, but someone has to speak up for the poorest, least skilled Americans.

Wall Street Journal (click here)

WASHINGTON (AP) — The Labor Department reported Thursday that the number newly laid off workers applying for benefits dropped to 601,000 last week. That was far better than the rise to 635,000 claims that economists expected. But the total number of people receiving jobless benefits climbed to 6.35 million, a 14th straight record.

There’s one small problem with the bold statement above. The population of the U.S. has roughly doubled since the 1950s, so comparisons of today’s unemployed (unadjusted) to past periods is meaningless without adjusting for the population. The current number of unemployed (6.2 million average for April) is about 2% of the current U.S. population (estimated 306.56 million for April), which is still below the 2.12% level in 1975. So the claim of a 14th straight record for Americans receiving jobless benefits is not accurate, after adjusting for the size of the U.S. population.

Facts from the October BLS report on state unemployment rates, ranked from lowest to highest:

1. Five states have unemployment rates at 3.6% or less (SD, WY, ND, UT, and NE).

2. 33 states have unemployment rates below the national average of 6.5%, 15 states are above 6.5%, and two states are at 6.5%.

3. The median unemployment rate by state is 5.7%, with 25 states at or below 5.7% and 25 states at or above 5.7%, and mean by state is 5.86%.

Based on #2 and #3 above, Mark Perry suggests that the reason the national average of 6.5% is above the median of 5.7% is either because: a) the states with higher-than-average unemployment rates are also states with higher-than-average population, and/or b) there are more extreme “outliers” above the median than extreme outliers below the mean, bringing the mean of 6.5% above the median of 5.7%.

Both of these are probably correct. Some of the states with the highest jobless rates are also states that have large populations (MI at 9.3%, CA at 8.2%, OH at 7.3% and, IL at 7.3%). Moreover, the two states with the highest rates are Michigan and R.I. with 9.3% rates, 3.6% above the median, while the two states with the lowest rates are SD and WY with 3.3%, or only 2.4% below the median.

The bottom line is that economic problems and labor market weakness are not necessarily distributed equally around the country, but the biggest problems are perhaps somewhat concentrated in some of the states with the largest populations. Fourteen states have unemployment rates below 5% for example, which would normally considered to be pretty far from recessionary levels.