Jobs In The 21st Century

by John B. Hagens

John has been with IPR since 1990, with activity in all of IPR's businesses. Prior to joining IPR, John was senior vice president for the WEFA Group, with responsibility for the company's U.S. economic forecasting service. Before his ten-year stint with Chase Econometrics (and then WEFA), John had jobs as senior economist for the Carter Administration's Council on Wage and Price Stability and for the Social Security Administration, the latter under a Brookings Institution Economic Policy Fellowship awarded while he was an economics professor at Colby College. John holds an undergraduate degree in mathematics and economics from Occidental College and a Ph.D. in economics from Cornell University.

Jobs in the 21st Century, So Far

As the first decade of the 21st century draws to a close, it is frightening to see the impact of the Great Recession on the nation's workforce. Not only are jobs the essential lifeblood of the consumer economy, employed workers are the primary users of technology products and services sold to businesses. One picture pretty much tells the entire story. From 2000 to 2007, employment averaged a little less than 1% growth per year for a total job increase of about 7 million. Jobs fell in the early part of the decade during the last recession, but after a slow start during the so-called jobless recovery, they fully recovered and continued increasing up to December of 2007. In the counterfactual case where our economy did not experience the Great Recession, an additional 2.8 million jobs would have been created from December 2007 to today.

However, as we all painfully know, this case is purely hypothetical. In fact, from December 2007 to the job trough in December 2009, the U.S. economy lost 8.4 million jobs. Since December of 2009 we have seen a painfully slow recovery of these lost jobs. The gap between employment at the trough of the recession and where employment would be today if we had not had the recession is 11.2 million jobs. We are now about 10% of the way back, with the 1 million job gain since last December. Friday's report from the Labor Department of an uptick in the unemployment rate from 9.6% to 9.8% and a very anemic job gain of 39,000 are not encouraging portents. At the rate of job growth in 2009, 9.5% unemployment, plus or minus, will become the new norm. One can only hope that the "uncertainty" pundits are right: once the haze around income tax rates, financial reform, deficit reduction, and environmental policy clears, businesses will have the confidence to begin hiring in a major way once again. Let's also hope that the demand for the resulting increased production also comes about! In my old course on the history of economic thought I learned of an 18th century theory called "Say's Law." To paraphrase: build it and they will come. Let's hope this isn't all a dream.