Aug. 13 (Bloomberg) -- A number of economic analysts have seized on July's unexpectedly weak jobs report as the key to unlocking a supposed economic mystery: Why have so many Americans remained so anxious about an economy that is in recovery?

The fact is, we didn't need last Friday's jobs report to explain the continuing economic dissatisfaction of typical working families. Even before the dismal report's release, this case didn't take Sherlock Holmes to crack.

So put me down as agreeing with those Republican pundits who now say we shouldn't overemphasize the last couple of bad jobs reports. In fact, let's do what a lot of Bush administration officials wish they could do: throw out the last two anemic months of job growth (32,000 in July and 78,000 in June). As you'll see, every clue as to why so many working Americans feel this economy isn't working for them was already embedded in the first 40 months of President George W. Bush's term.

Unraveling this non-mystery begins with an understanding of just how historically disappointing the economic recovery has been for jobs and income.

During the 2001 recession, the U.S. economy lost 2 million jobs -- a painful, though historically moderate hit. In most sound recoveries, there's a strong pickup in payrolls. It provides employment for the 100,000 to 150,000 new workers coming into the workforce each month, as well as for those who have lost jobs, have been forced into part-time employment or even dropped out of the workforce altogether.

Deeper Jobs Hole

Yet what we experienced after the recession officially ended in November 2001 was nothing like most recoveries. In the first two years of this ``recovery,'' our economy continued to lose jobs -- the first time this has happened since the 1930s. Rather than rebounding from the recession, the recovery threw us deeper into a jobs hole.

Simple math suggests that if we kept digging this hole deeper for almost two years into the recovery, when job growth did return it would have to be solid, robust and sustained to take the substantial steps needed to climb our way out.

Herein lies the most important clue as to why Americans are rightly dissatisfied with the job situation. The period since our economy began creating jobs hasn't only failed the robustness test, it has been pathetic by historical standards.

New Workers

Even if one puts aside the meager growth in June and July and looks only at the period the Bush administration seems most proud of -- the 12 months following the passage of their tax cut in late May 2003 -- it turns out that job growth was weaker than in any comparable period in a recovery since the 1930s.

The 110,000 new jobs created, on average, each month in those 12 months weren't even enough to absorb new workers entering the labor market, and that figure was weaker than even the worst year of job growth during the Clinton presidency.

Indeed, however you cut the job numbers since the passage of Bush's 2003 tax package, our economy hasn't seen such weak employment growth in a recovery in 50 years.

Coming on top of the unprecedented job loss in the first 21 months of the recovery, this anemic return to employment growth - - even before June and July's disappointing numbers -- left our economy 7 million jobs behind where Bush's own Council of Economic Advisers projected we would be (a forecast made in February 2002, after Sept. 11 and the beginning of the recovery).

More Part-time Workers

It's little mystery that, this deep in the hole, a few good months of job growth earlier in the year didn't spark the excitement some might have expected. Imagine an investor watching a $50,000 portfolio plummet to $10,000, and then getting a call from his broker that his investment had grown by a solid, but not spectacular, 20 percent to $12,000. The investor might recognize improvement, although he wouldn't be jumping for joy.

The historic weakness of the jobs recovery has revealed itself in the numbers behind the headline jobs figures as well. Long-term unemployment over the past several months remains at its highest level since 1984; labor-force participation has fallen to historic lows -- explaining much of the decline in unemployment -- and the number of people working part-time because they can't find full-time jobs is up 35 percent since Bush took office.

Real hourly and weekly wages of average workers are actually lower today than at the beginning of the recovery, offering another important clue why Americans continue to feel anxious. The last jobs report only confirmed that hourly wages this year aren't even close to keeping up with inflation.

Less Pay

Finally, we didn't need that report to discover that even the jobs being created were paying less than jobs being lost. Prior to the report, Merrill Lynch & Co. had concluded that almost 90 percent of new jobs created since last August are in job categories paying below average wages.

Morgan Stanley Chief Economist Stephen Roach pointed out that part-time jobs accounted for 97 percent of new jobs created from February to June, and CIBC World Markets found that average wages in industries gaining jobs over the past three years were 30 percent lower than in industries losing jobs.

These reports and others look at job quality in different ways; what's striking is that almost every method tells the same troubling story.

Of course, Bush doesn't deserve blame for every bad number we have seen in the economy, neither in his first 40 months in office nor in his most recent two. Yet the historic weakness of jobs and income even in the most-touted 12 economic months of his presidency underscores how over-the-top it is for his administration to argue that its regressive, deficit-exploding tax cuts have been a whopping success for U.S. workers.

To contact the writer of this column: Gene Sperling in Washington at at gsperling@cfr.org.

Last Updated: August 13, 2004 00:03 EDT