Employment flat-lined in August, leaving the nation’s jobless rate above 9 percent. The continuing economic stagnation is taking a toll on consumers. The Commerce Department reported that household income slipped 0.1 percent in August—the first time income has actually fallen in nearly two years.

Thursday, Commerce reported initial claims for unemployment benefits tallied 404,000—the third consecutive week of 400,000-something filings. Thankfully, layoffs are down from their peak in early 2009. Yet that is little solace to the 22 million unemployed and under-employed Americans who are suffering because job creation is mired about where it was at the depths of the recession. This jobs deficit is leaving our country short half a million new jobs each month.

This is due in part to the 23% drop in new businesses, the traditional driver of job creation, from 2007-10. The jobs deficit is further exacerbated by recent federal mandates that increase the cost of having workers on payroll. In that vein, 33 percent of businesses surveyed recently said that they were not hiring new workers because of increased costs associated with the federal health care mandates enacted in March 2010. What had been a promising arc of improvement in the unemployment situation dissipated shortly after enactment of that legislation.

The persistent jobs deficit and dearth of strong economic data are crushing disappointments in a normally optimistic nation accustomed to rapid rebounds. The second quarter of 2011's meager 1% GDP growth pales in comparison to the five straight quarters of 7% to 9% GDP growth coming out of the 1981-82 recession.

The effort to deficit-spend our way to widespread job growth has failed. But there are other ways to stimulate private sector growth and job creation. This requires that the administration and policymakers adopt a less hostile attitude toward America’s private sector.

Around the time President Lyndon B. Johnson was declaring a War on Poverty in the 1960s, federal, state and local governments began accelerating a veritable War on the Private Sector. 

The War on the Private Sector was never formally declared, trumpeted in press releases or even intentional. This undeclared war is largely collateral damage in the pursuit of social, environmental and other domestic agendas that spawned and continue to spawn higher taxes, unfunded mandates and regulations that micro-manage employers and impose civil and criminal liabilities.

Were there laudatory results from some of these initiatives? 

No doubt. 

Do the results in all instances warrant the continued costs? 

Questionable.

There are a lot more costs, hassle and peril associated with starting and growing a business today than decades ago. Over two-thirds of the new jobs created today are created by small business employers. A September 2010 Small Business Administration report found that federal regulations cost more than $1.75 trillion in 2008. That report also found that small businesses face a 36 percent higher regulatory cost, per worker, than large companies.

Today’s policymakers should halt the tide of government regulations that are discouraging job growth and understand the challenges private sector employers face in creating new jobs for the workforce.

Our leaders should also advance and leverage trade opportunities overseas. President Obama has been admirably pro-trade in public remarks but there has been no progress in moving any new free trade agreements to expand exports abroad and create jobs at home. Korea, Columbia and Panama trade deals now await his signature.

America’s private sector job creators need elected leaders to lead and get out of the way.

Elaine L. Chao served as U. S. Secretary of Labor from 2001-09 and is now a Distinguished Fellow at The Heritage Foundation.