Posts Tagged ‘jobs’

Labors lost: Six reasons

5 September 2011

The Christian Science Monitor‘s Mark Trumbull has an excellent new piece, “Six Reasons Why America Can’t Create Jobs.” Namely:

1) ‘The rent-a-worker economy’: a reliance on contract workers and outsourcing. Contract workers are easier to let go when conditions worsen. And having made do with less, many companies are eager to try to do the same even when conditions improve.

2) ‘The résumé gap’: a lack of skilled workers, or least of workers with the skills businesses want.

3) ‘Rise of the “plutonomy”‘: an increasingly skewed distribution of wealth is bad for aggregate demand because the rich don’t consume as much of their income as poor and middle-class people do.

4) ‘The China syndrome’: China can make high-tech products too, and often more cheaply than we can, even after taking productivity differentials into account.

5) ‘Somebody start a company!’: ‘. . . start-up activity has plunged. Running 25 percent below its 2006 peak, it is at its slowest pace since the Labor Department began tracking the activity in 1994.’ Reasons cited are tight funding and ‘high uncertainty and low confidence about launching new ventures in a weak economy.’

6) ‘When a home is a dungeon’: The mortgage debt overhang is still large — 11 million Americans are “underwater,” i.e., they owe more on their mortgages than their homes are currently worth. For this and other reasons, consumers are less willing to spend, even relative to a year ago.

The article tries to end on a hopeful note by citing some companies that are actively hiring, but it also notes, ‘Still, overall the country would need to generate about 21 million new jobs by the end of the decade in order to return to a 5 percent jobless rate.’ Let’s do the math: September 2011 to December 2019 is 8*12 + 4 = 100 months. So the economy would have to generate an average of 210,000 jobs per month for the next eight years (and four months) to get unemployment back to its average rate for 1997-2007. Keep that number in mind every time you see a monthly employment report. Number of times since last summer that the U.S. added 210,000 jobs in a month: 2. And the total for August was 210,000 jobs short of that goal.

Got a job

2 April 2010

The economy added 162,000 jobs in March, which is the most in three years, i.e., the most since before the recession or the financial crisis began.  Something to find a small measure of comfort in — small because the unemployment rate still stands at 9.7%.  But this is a start.

UPDATE, 5 APRIL 2010:  James Hamilton of Econbrowser thinks this is very, very good news, along with such other glimmers of light as the upward trend in manufacturing, as seen in the best reading of the Institute for Supply Management’s “PMI” indicator since 2004.  (What is PMI, you and I ask?  It is an acronym that no longer stands for anything in particular.  It used to stand for Purchasing Managers Index; now it combines multiple measures, including new orders, inventory levels, and labor-market conditions.)

Jobs, jobs, jobs, stimulus, Depression

28 January 2010

It’s been noted that President Obama used the word “jobs” more times (29) than other word in last night’s State of the Union address.  Much of that was in connection with a jobs bill that he plans to introduce, and about which he mentioned a few reasonable-sounding specifics.  But indications are that he and his party will try to do this one on the cheap, rather than open themselves to the “big spenders” charge or the predictable cries of deficit scolds who think there’s nothing wrong with the economy that a good bloodletting won’t cure.

And, according to polls, last winter’s American Recovery and Reinvestment Act (a.k.a. the stimulus bill) is unpopular.  It was too small to make much of a dent in the massive unemployment crisis, and the continued high and rising unemployment has led many to conclude, by that famous fallacy post hoc ergo propter hoc and with the encouragement of countless politicians and talking heads, that the stimulus actually caused the rise in unemployment.  Brad DeLong has an excellent column on “America’s Employment Dilemma” right here.

Some on the right have likened the Obama stimulus bill and the still-high unemployment to the New Deal jobs programs and the Great Depression:  the argument is, if they didn’t end it, then they must have caused it.  (Which is kind of like blaming Doctors Without Borders for an earthquake.)  Others make the less extreme but still ridiculous argument that because unemployment is still high, the fiscal stimulus must not have created a single job.  (Which is hogwash — Prof. Menzie Chinn of Econbrowser shows that private studies by IHS/Global Insight, Macroeconomic Advisers, and Moody’s estimate that the stimulus has created 1.1 to 1.6 million jobs to date, and Chinn himself estimates that the number may be more like 2.9 million.  It’s wonkish stuff, but worth a look.)

Anyway, here’s an unpublished letter I wrote a few weeks ago to USA Today in response to a letter that made that bogus argument about how those New Deal programs that employed millions somehow didn’t employ anybody:


Counterparty confidence

7 March 2009

Seen on a church sign in Clay, NY:




11 million unemployed, 21 million out of work

9 January 2009

People it’s bad.  And the December 2008 unemployment report was worse.

11.1 million unemployed.  But only if you go by the traditional definition.  Add in the 8 million involuntary part-time workers (who say they’d be working full time if full-time work were available) and the 1.9 million discouraged job-seekers (who say they didn’t look for work in the past month because it looked hopeless), and you get an astonishing 21 million people wanting but not having full-time work.

This measure, sometimes called “underemployment” or “U-6 unemployment,” corresponds to a U-6 unemployment rate of 13.5%. That’s the highest in the short time the Bureau of Labor Statistics (BLS) has been keeping track of that statistic (1994-).

It gets worse.  Back to regular (U-3) unemployment, today’s news articles have said the 2.6 million jobs lost in 2008 were the most in a year since 1945, when the economy shedded 2.8 million jobs.  But but but — most of those 1945 jobs must have been in the active military, as World War II ended that summer and the BLS says civilian employment fell by only 1.1 million that year.  (And, as economic historian Robert Higgs has eloquently pointed out in numerous papers, overall U.S. economic well being was much higher after the war, despite the end of “full employment.”  The returning veterans surely preferred being victorious but temporarily out of work to continued combat.)  So you’d have to go back even farther to find a year with as much U.S. job loss as in 2008.  How far?