Private companies have picked up part of the slack. In fact, private payrolls are higher now than they were when Obama took office in January 2009.
In July, private sector job gains were broad-based. Manufacturing added 25,000 jobs, the most since March. Restaurants and bars added 29,000. Temporary help services added 14,100 jobs. Retailers hired 7,000 more workers. Education and health services gained 38,000.
Tania Dougherty, owner of The Little Wine Bus in New York, has two tour guides and wants to hire at least three more. That's because more companies are booking her daylong winery tours for employee outings.
After the financial crisis hit in 2008, companies cut back on bonuses, raises, vacation days and other perks, Dougherty said. But employers are now realizing they need to spend more money on their workers in order to retain them, she said.
"They want to show them a good time," said Dougherty. "People are working longer hours. It's a way to reward employees. They deserve the day out, and companies are realizing that."
Meanwhile, Sherry Sheppard, owner of the I Love Cupcakes store in Largo, Fla., would like to hire a new employee but is holding off until she's sure the economy is getting better. She has three employees now. If more people lose jobs, they'll be less likely to spend money on guilty pleasures like cupcakes, Sheppard said.
"Being that it's an election year, it's hard to tell how the economy is doing," Sheppard says. "Maybe after the election we'll get a better picture."
AP Business Writer Joseph Pisani in New York contributed to this report.