Flat Lining of the US Economy
How the recent economic downturn is simply an extension of the bad market that has plagued America since the new century started.
The fact that the United States is hemorrhaging jobs is no big secret. Since 2008, over 2.6 million Americans have been officially added to the swelling ranks of the unemployed. What is often overlooked is that this problem is not as ‘young’ as many politicians and the mainstream media would have you believe.
To understand the concept of joblessness it is important to understand that it involves more than just losing a job. It also involves not having one to begin with. When the media reports total numbers of job losses and gains, it usually fails to take into account the additions of new people to the work force. Most economists agree that every single month between 100 and 150 thousand new people are added to the job market. These are people who haven’t worked before either because they were in school, were homemakers, or ,in some cases, had been incarcerated. Therefore, every month America must create enough jobs for those who lost jobs in the previous month and for the 100 to 150,000 new labor force additions. How has America fared then in job growth this century? Let’s find out.
If we start at the low end and say that only 100,000 jobs need to be created per month, we would still need 1.2 million new jobs per year to keep up with population growth. From the Bureau of Labor Statistics we obtain these facts about the overall job growth since 2001:
(Note: jobs numbers are in millions)
Year Jobs created jobs needed Difference Cumulative difference*
2001 -1800 1200 -3000 -3000
2002 -500 1200 -1700 -4700
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Post Commentstevil kinevil
On February 6, 2009 at 12:38 pm
Very good article. Well written, and good use of statistics. One thing that i felt was missed out was retirement. You mentioned new people coming into the job market, but what about people leaving the job market?
RickC
On February 6, 2009 at 1:20 pm
Thank you for the insights. I am the article writer. As for the retirement question, it is best to answer that in terms of statistics. So let me just consider the last 30 years.
When Reagan was president in the 1980’s people were retiring then as well. During the 1980’s over 17 million net jobs were created.
People were retiring in the 1990’s too. Over 22 million net jobs were added under President Clinton.
SO people have been retiring consistently. There has not been a massive uptick in retirees that could open up enough jobs to compensate for a net job creation of less than 4 million. In fact, I have read articles that point out many of the new jobs created have been taken by people coming out of retirement. Many retires find that due to the stock market(which has not grown but contracted in the last several years) retirement is not a possibility.
Good point to be made though. Retirees leaving the market is often referred to as the birth/death model.