As noted in my last writing on this subject, the rate of job growth and scale of private-sector joblessness has reached new historical dimensions over the last three expansion cycles:
TABLE 3: Rate & Scale of Private-Sector Job Growth During 1982- June 2010
A. 1982-90 Expansion 18,422,000
Ave. Growth/Year 2,401,825 (= 200,000/Month)
Ave. % Increase/Year 2.7%
B. 1991-01 Expansion 21,508,000
Ave. Growth/Year 2,150,000 (= 175,000/Month)
Ave. % Increase/Year 2.2% (= -10.5%/Year)
C. 2001-07 Expansion 6,208,000
Ave. Growth/Year 1,020,549 (= 85,000/Month)
Ave. % Increase/Year 0.9% (= -50.0%/Year)
________________________________________________________________
Dec. 2007- Aug. 2009 Job Loss -7,047,000
June 2010 Unemployment 8,000,000 (excludes 5% normal unemployment)
June 2010 Underemployed, 8,000,000
Discouraged, Unqualified
NOT Looking for Jobs and
Therefore NOT Reported in
Labor Force Statistics.
TOTAL EMPLOYMENT DEFICIT 16,000,000
Required Jobs to Meet 1,000,000 (a)
Private-Sector Labor Force
Growth
Source: Advance & Rutgers Report:
___________________________________________________________
(a)
During the the final 2 decades of the 20th century, the nation gained about 40 million jobs vs. a loss of approximately 1.8 million in the current decade (6.2 job gain minus 8.0 added job loss due to recession)
Assuming, optimistically, we can recover and sustain an average monthly private-sector job generation level equal to the 1991-2001 expansion that averaged 175,000 jobs a month, it will take as I’ve said before:
· 44 months or until year-end 2013 (most likely 2014 given poor progress of only 600,000 jobs generated through June 2010) to recover current 8 million reported unemployed above 5% normal unemployment level
· another 44 months to recover current 8 million not reported unemployed or underemployed in the labor force statistics
· another 10 months to add sufficient jobs to cover labor force growth
This amounts to 8 years or not until 2018 before all 17 million jobs are recovered including a 1 million annual increase in the private-sector job labor force.
The Center for Economic Policy Research study concludes it will take until March 2014 just to recover 8 million reported added jobs lost due to recession. They do not consider the unreported jobs lost nor the increase in private-sector labor force. However, indirectly, they do consider these two factors when they conclude that the pre-recession unemployment rate of ±5% will not be achieved until 2021! Think about that for a moment.
If our respective analyses don’t give adequate concrete evidence of the disastrous 30 year pattern of declining job rate growth – both in scale and duration, in service jobs as well as manufacturing jobs – then I don’t know what it will take to WAKE US UP to the serious chronic job deterioration confronting the nation.
For the first time since WW II (as stated in the Advance & Rutgers Report), our country appears trapped in an ominous lengthy job growth stagnation if not job-loss recovery dynamic even as we come out of the recent recession. This was evidenced for the first time in the 2001 eight months recession. In the 19 months after the recession, private-sector employment declined another 1,344,000 jobs (see Employment Downturn Comparisons)! This factor plus an insidious corporate business culture that feels comfortable producing at ever higher levels with fewer workers spells big trouble for the country’s economic stability and living standard for middle class Americans.
We have gotten ourselves in a real box of a jobless growth recovery pattern. US giant corporations and banks are making more money abroad and at home by exporting jobs in exchange for cheap imports. The losers under this paradigm are middle class workers and the entire nation. For where is the economic growth coming from?
There are four possibilities:
(1) Consumption
(2) Government Spending
(3) Private Investment
(4) Net Exports
As I’ve stated so many times before, our Consumption level at >70% of
Government Spending and incentives to facilitate innovation are critical but Government is also sabotaging its flexibility here with unaffordable Defense spending at >5% of
Private investment is at an all time low as a generator of
And “Deficit Hawks” want the government to save. So the first three possibilities for spurring economic growth are in a SAVING mode rather than a SPENDING mode (by pragmatic necessity for consumers) while demand and price deflation are still on a dangerous downward trend. We are crawling into the Japanese
1994-2004 prolonged deflation stagnation which ultimately required far higher debt levels to come out of their mini-depression.
Net Exports have historically been a huge negative drain on our government’s financial resources. Two years ago, monthly trade deficits were running at $60 billion, dropping to $34 billion at the peak of the recession and now moving up again into the $45 billion range. Unlike most mature European countries, America is sucked into a morass of trade deficit borrowing from China. This paralyzes the nation’s flexibility to pump monies into the economy in good and especially bad times. The underlying unresolved problems here, besides excessive trivial household consumption, is not free trade but unfair trade and US firms outsourcing U.S. jobs to bring back cheap imports to feed our debt inducing excessive consumption model.
We need the best cool, determined, unbiased brains to come out of these many complex, counter-productive Catch 22s, structurally limiting the options for achieving improved middle class job growth and opportunities for
Can we finally get our innovative CAN DO ACT together? I’m not optimistic given the inherently destructive, non-productive, ego-centric political culture taking our society down, down, down with its ideological two-party power plays …. where it’s winner take all or where forced compromise is resorted to to stop the bleeding rather than to undertake vitally needed fundamental change ... where, as usual, Wall Street’s money remains the controlling factor in our endangered democracy.
To requote former President Reagan, “Wall Street and Job Outsourcers are the problem, not the solution.”
Frank Thomas
The Netherlands
July 21, 2010