Home » Money » Where are the Jobs?

Where are the Jobs?

Since October, most of the financial news has been about Europe and the potential for a global meltdown.  The credit squeeze resulting from this crisis has become painful enough to demand serious action, which in global terms means our own Federal Reserve taking the lead.  Very little has changed since this crisis began upwards of two years ago, except the brick wall is approaching rapidly.

But what about the other big economic problem, unemployment?  Very little has been written about jobs in the US since it appeared in September that something like a turnaround has occurred.  Unemployment Initial Claims were 390k-400k each week, seasonally adjusted, through October and November with little change.  That’s a net loss of 1.7M jobs per month before we add in the total creation to arrive at the total employment picture.

The easiest way to explain the jobs picture is with a few graphs from our old friends at the St Louis Fed.  The easiest way to see where we are is with the Total Employment since 2007:

You can see from this chart that from the peak of 138M employed people in the US the last official “recession” dropped about 8.8M jobs to a low of 129.2M.  Since that bottom in early 2010 we’ve rebounded about 2.3M jobs to 131.5M.  More to the point, the total number of jobs has been expanding at a steady, even clip for the last year.  Looks like good news?

The problem is that as young people enter the workforce, we need more than the gap of about 6.5M to reach full employment.  Estimates run between 8M-10M typically, but a lot depends on family arrangements and how that generation winds up defining their expectations in life.  At this rate, it will take another 4-5 years to get to the point where unemployment is not a significant problem.

That may make this “recovery” look especially weak, but it is far from it.  Let’s expand the graph a bit to include the last two official recessions, going back to 1989:

Note that in 1990 there was a longer lag-time at the bottom before things picked up, showing that in the first 2.5 years since the official end of the recession a similar number of jobs were created as have been this time around. For the official recession of 2001 we can see it took even longer to create that number of jobs, with the net loss continuing for three years after the end of the recession.  This is one of the many reasons why that “recovery” is dubious and the recessions of 2001 and 2007 appear linked in one large Managed Depression.

While the employment picture appears almost static there has been consistent growth in jobs over the last year.  This has come despite some rather large spikes in layoffs and resulting Unemployment Initial Claims over the summer.  The last chart is the same as the first, with the weekly Initial Claims on the right-hand scale.

Despite shedding around 460k jobs per week on average, or a stunning 58M over the same 2.5 year period, we’ve managed to eek out respectable gains in the total employment.  Granted, many of these claims are people filing multiple times as temporary or seasonal jobs run out, but it is still impressive.  Total employment is going up much faster than layoffs are going down, meaning new jobs are being created, probably in new fields.

What we can say is that despite a great deal of turmoil in the job market, there is net growth in the number of jobs.  The pace is not great, but it is steady and consistent.  Layoffs continue and jobs are being lost, but they are being replaced at a slightly faster rate.

This is what a restructuring economy looks like.  As long as there is no big credit meltdown there is a decent chance that the pace of job creation might even pick up as the restructuring firms up and opportunities for major investment become obvious.  But the base for a strong recovery appears to be in place already.

17 thoughts on “Where are the Jobs?

    • Yes, there is a point where we finish off the restructuring by deciding as a people how we want to live our lives. Reduced workweeks are definitely something we should consider to spread the work around. But I still think that reducing the overhead per employee is very important as we move that direction – which is to say moving to a single payer health system and taking the tab off of employer’s backs. It would make major changes like a reduced workweek much more affordable.

  1. Are you saying that watching the initial claims does not make sense anymore? I remember it worked well for predicting the unemployment figures over the last year but if it won’t anymore that is a big change.

    • Yes, that is what I am saying in a nutshell. Job growth is coming from new areas now as the next economy takes the place of the old one. I think we can say we’ve turned the corner. The old economy continues to shed jobs rapidly but there is still a net gain.

  2. That does look hopeful but 5 years to get back to even is not good. We need more job growth now. The turnover in jobs is incredible so the fact that we are ahead at all is amazing. Glad you found some good news to report.

    • Barring a major credit meltdown, I think there is reason to believe this will accelerate. Note that there is substantial evidence that there are new opportunities out there – but where are they? Why don’t we hear about the new sectors and kinds of employment? Once those become “hot” the money that is lying around waiting for investment opportunities will flow again and things should pick up. It’s a matter of identifying the Next Economy so that it can move forward, IMHO.

  3. It is good to see a steady increase in jobs, but since it’s unlikely (I suspect) the new jobs are of equal pay/benefits to the ones lost, we may not be gaining ground as much as we we should…or could.

    • That is a problem. What we can say is that wages are unlikely to rise until there is little unemployment. There is a chance that wages aren’t falling too badly because there are shortages of skilled workers in some areas, however.

  4. As for job growth I will believe it when I see it but it is good to not be at the bottom. Also good to know this is about the rate we can expect at this point.

  5. Just so that everyone knows – the November jobs report due out on Friday will be excellent. The ADP figures have been pretty close lately and they are amazing. I was expecting a decent report but not this good:
    See how Barataria tries to tell you what tomorrow’s news will be? That whole Fed action stuff was here in April 2010, no point in covering that. 🙂

  6. I take it you expect the jobs report to be very good tomorrow (friday)? Because I read today there was bad news and I don’t know how it goes from good to bad to good again in a short time.

    • Yes, I expect at least close to 200k jobs will have been created – the ADP report has been pretty close lately. The report today was the Unemployment Initial Claims, which is stuck at 400k per week (or a shade less). That seems like a lot of jobs lost – 1.7M per month – but other places are apparently creating more than that. It would mean that 1.9M are to be created is the BLS “official” report comes in where the ADP estimate was.

      That means that of the 131M jobs, each month 1.3% are being lost and 1,5% are being created. Both of those numbers are rather large, and the growth is in the relatively small difference between them. But … it would mean that net growth is accelerating just a bit. IF it all comes in that way, that is. Stay tuned! 🙂
      (How often have I said “stay tuned” lately? Far too much?)

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