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Today, the Obama administration announced two more pieces to the president's "We Can't Wait" package of initiatives, a series of executive actions designed to promote job growth without congressional approval. The newest programs are designed to encourage entrepreneurship and small-business hiring. Congress has also managed to eke out a couple of measures that might spur hiring as well. Action on jobs looks good for any politician at this point, and for out-of-work Americans, any help counts. But the scattershot array of proposals that Washington has produced remains a tiny band-aid for an economy with a badly wounded housing market.
Data from the Labor Department shows that the U.S. economy is a much changed place from past recessions. Despite small recent gains, manufacturing employment is down more than 37 percent since the last major recession, in the early 1980s. Healthcare is a bigger share of the economy than ever, and has continued to grow unfazed by downturns of any size. And construction has shrunk considerably, having experienced its biggest dip in employment on record since 2007. However, as with past recessions, housing--one area on which Washington has taken little policy action--appears to be the key to fixing the economy.
By comparison, many other initiatives for boosting economic growth seem insignificant. Free trade agreements, like those signed with South Korea, Colombia, and Panama earlier this year, were trumpeted as potential boons for U.S. manufacturing. However, the Great Recession didn't kill American manufacturing; that has been on a relatively steady decline since 1980. "Speaking strictly about employment shares of industries, generally the service industries have fared better than the manufacturing industries," says Ban Cheah, an analyst at Georgetown University's Center for Education and the Workforce. With an economy that is changing structurally, decidedly moving away from manufacturing and toward services, creating meaningful job growth in manufacturing could...