It’s been quite a year in the economy. 70% of all Americans think the economy is going badly according to a CNN poll, with unemployment the biggest concern of a solid majority. By a 7-1 margin Americans will tell you this is a bad time to find a “quality” job, by a recent Gallup poll – the worst figure they’ve ever seen. But 2011 was a year in which there was solid growth in the total number of jobs, even if they aren’t quite what people are hoping for.
Total job growth was around 2M total for the year once we have the last of the data in. That’s about what anyone expected for the year, but what’s been surprising is how consistent it’s been. The graph below shows data from the St Louis Fed on the total number of jobs in the USofA:
With such solid, consistent growth, why is everyone so down on jobs and their prospects? The answer has come to us in waves through the year, as shown in the same chart with an overlay of the unemployment initial claims figures (scale on the right), a measure of layoffs at larger companies:
Despite overall job growth, there were nasty spikes in job loss going into the Summer and again in the Fall. While there are jobs out there and growth is continuing, there is less security and more constant scrambling.
Note, however, that we’re ending the year with a solid drop in initial claims. The worst may indeed be over for layoffs at larger companies.
Going into next year we can see there is momentum for an improved 2012 in many ways. But the turnover in jobs remains high even as the total number of jobs is improving. Quality of the jobs we have is clearly a major concern for everyone, something that is going to reflect security as well as pay and benefits.
Taking all of this together, there are many signs that the economy is indeed restructuring to form a new economy – one that many of us are not going to recognize in the next few months. It’s not an economy many people are happy with, but it is turning around overall. While 2011 was not the absolute bottom for jobs (that occurred in February 2010), this was the year in which the restructuring which is laying the foundation for a real recovery took place.
Where are the new jobs? Measures of small business job growth are notoriously slow to catch up, running six months to a year behind overall surveys of workers. I won’t report them here for that reason. But given that there has been solid job growth in the face of strong layoffs at government and larger companies, there has to be job growth in small businesses. These typically offer less security, longer hours, and fewer benefits. It explains the pessimism about “quality” jobs.
But given time, small businesses sometimes grow into larger businesses that provide the bulk of the jobs in the economy. In an excellent piece by Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, the difficulty of relying on small business to grow the economy is explained:
But don’t small businesses at least fuel job growth? Sort of. It’s not small businesses that matter, but new businesses, which by definition create new jobs. Real job creation, though, doesn’t kick in until those small businesses survive and grow into larger operations. In fact, according to path-breaking work by the economist John C. Haltiwanger and his colleagues, once they accounted for the outsize contributions by new and young companies, they found “no systematic relationship” between net job growth and company size.
This is what appears to be the story of 2011 in employment. New businesses appear to be springing up and creating jobs, but they won’t really show solid growth until they take off and become established. That’s likely to be the story for 2012.
Polls show that Americans are pessimistic at the end of 2011, but their fears may be overstated. We won’t know for sure until the middle of 2012, but there is reason to believe that the restructuring is kicking in and things will improve. It may not have felt like it, but 2011 may yet go down as the year that we turned the corner and the restructuring that fueled the next economy started. Here’s to a Happy New Year.
Barataria - The work of Erik Hare 
Interesting and I hope you are right. One question – why is small business day “running six months to a year behind” the job information you present here?
The data we have is “survey” data – the Bureau of Labor Statistics asks employers how many jobs they have or the Census Bureau asks people if they are working. There’s not a lot of detail in it. It’s not until the tax forms are all filed that the really useful details are sorted out. I can’t find where the new jobs are being created other than the industry sector “professional and management” – that could mean a lot of things, but I think a lot of it is consulting. We’ll see in a little while when more info comes out.
Quality of job is an important issue. You’re right that security may be the biggest concern people have, but I’d love to see more information on wages and benefits too. You had something a while back about hours worked going up, does that explain why people are so pessimistic about job quality?
I think wages are stagnant, which is to say at least they aren’t going down much. Yes, the length of the workweek is a good thing to keep an eye on and it isn’t changing a lot right now – but I’ll look at it when I get some time to see if there’s a longer term trend. But yes, that poll on “quality” of jobs is interesting but so many things go into “quality” – I’ll bet long hours is a problem.
I think the earlier Barataria theme that the whole world is in a great depression hasn’t really changed. It may take a generation to recover all the jobs that were lost. In the US much manufacturing had just had shifted to the production of homes. China’s economy may run into problems as Time magazine has alerted us. They reported on China’s economy so no would say the maintream media has no clue.
Previously many thought, Europe would shown us a new economic-political model. A lot of liberal Democrats thought that Europe was a third way. But now we know better and hopefully the Euro wil be equal to the dollar soon. Some thought Europe was better than the US since they spent less on defense.
I’m not arguing that this isn’t a Depression – we’ve been in something like a Depression for a decade. But eventually we come out of it. It’s been very uneven so far since this is the “Managed Depression” – most of the managing has been for the benefit of the upper class.
Just because I say this is a Depression doesn’t mean I’m depressing. 🙂
As the token Republican in Barataria one of my purposes is to push liberals into saying what kind of liberalism they want, so I know what I am voting for if I vote for Obama next year. There is a banking crisis. If a major reform is a return to Glass Steagall then I would like to hear Democratic politicians like Klobuchar, Franken and Reid say it and explain why.
There are signs of job creation but when the economy recovers liberals start saying their is to much income equality and what to increase benefits and regulation. Congressional Republicans want to reign in entitlements and to me that is good for businesses in seeing a federal government that can control itself. They agreed to some taxes, too. To me the heart of corruption is someone like Senator Patty Murray: she didn’t want to lose her Oregon seat by agreeing to a lower level of taxes.
The philosphical divides betweent the parties and ideologies really centers on the level of taxation at levels of government and the size and scope of government. . That is why you hammered home that supply side is dead. Supply side may be dead but there is certainly tax competition between nations and regions within a country. What the Minnesota Republicans did in saying no Governor Dayton is awesome because they put into practice their beliefs. Wasn’t that partly led by Sen. Amy Koch. She was the first female majority leader I am aware of. Where were her feminist defenders. Another commentator said the Republicans running the legislature are basically stooges. Maybe they are, but in civil political discourse : ) you are supposed to state it in more mild terms. I am calling that commentator on the carpet just like you did Brodkorb.
In relation to the Brodkorb story, I think the better question is what did the constituents of the MN legislative districts expect out of their new Republican
legislators and did they get it.
Oh, you’re far from the only Republican reader here, but we don’t get a lot of comments from the right. Sad, really.
If you want to know what Liberals really stand for … well, good luck with that. The ideological momentum has been with the right for about 30 years and I think will stay there. I think they win largely because they have a plan, any plan, which makes them appear intelligent. I don’t think many people knew more about the “Contract with America” other than the name – and Newt is still getting mileage out of it nearly 20 years on.
Of course, I’d like to stand for something as a party, and I hope I’m contributing to that. The March on (blank) crowd is much happier keeping it vague, as if good government is something like pornography (we’ll know it when we see it). I think that an active program of reform is essential, but without re-iterating core values it’s hard to get that going – but it blunts the small government arguments made by hatchet wielders nicely, IMHO.
That’s my schtick for now. I’ll say more later, and something ovr on teh Brodkorb thread, too. 🙂
I’m not sharing your optimism, I think that even if we are making progress we have many years before anything turns around.
Oh, don’t get me wrong – a decade into this and I think we have a decade left to go unless we get our act together. If we take this seriously and stop screwing around we can have a program of Reform in government that recognizes the Restructuring going on around us, helps it move forward, and creates much more equal opportunity for everyone. That’s a lot to ask, so I don’t really expect it – but I have to keep trying. Another decade of this crap and we may be looking at a revolution first.
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