Job Picture Not Very Rosy
July 28, 2016 at 4:25 p.m.
By Gary [email protected]
Writing for Americans for Limited Government, a conservative thinktank, he outlined what he called Federal Reserve Chairman Janet Yellen’s “new normal of less than 100,000 new jobs per month.”
He quotes the fed chair during a Dec. 3 hearing in front of Congress’ Joint Economic Committee:
“To simply provide jobs for those who are newly entering the labor force probably requires under 100,000 jobs per month.”
Basically, she was telling Congress that no one should really expect the economy to produce nearly as many jobs as it has in the past.
A new normal of mediocrity, so to speak. She may be right.
Romano notes as recently as 2010, the expectation was a lot higher. He quotes former U.S. Department of Labor Secretary Robert Reich in an op-ed for the Wall Street Journal, writing of “the 150,000 [jobs] needed to keep up with the growth of the U.S. population.”
The statistics point to a sort of demographical double whammy. Lots of people are talking about the fact that America’s workforce is aging and more baby boomers are retiring.
But less often discussed, according to Romano, is that at the same time the growth rate of the working age population is slowing.
He writes:
In the past year, the population of 16- to 64-year-olds has only increased an average 109,750 a month, according to data compiled by the Bureau of Labor Statistics. Comparatively, the average from 1980 to 1981 had it increasing by 198,750.
The demographic of working-age people is shifting and Americans are having fewer children at the same time.
Romano: So, Yellen is actually correct. To keep up with population replacement – since the employment population ratio is always less than 100 percent – will most certainly be under 100,000 jobs per month.
More like 78,000, to be precise, if one assumes 2007’s 71.8 percent employment-population ratio for 16 to 64 years.
That number will drop more in the years ahead because the number of working-age people remains stagnant.
The 71.8 percent employment-population ratio from 2007 mentioned above stands at 68.9 percent today. This accounts for around 4 million jobs lost in the economy since then.
This portends is a troubling trend of labor shortages and declining labor participation happening at the same time. Basically, fewer people looking for work at the same time employers can’t fill jobs they have available.
Romano sums it up:
At the same time economic growth and consumption is slowing down, so too will production. If another recession strikes in the near future, on top of those potential jobs already lost will be possibly millions more. Can you say vicious cycle?
Meaning the new normal articulated by Fed head Yellen may not merely be a benign indicator, but a symptom of long-term economic decline. We’ll know when the next recession hits just how bad it might be. Is there any way out of this malaise?
I am not an economist, but this article makes sense to me. It’s doesn’t seem like this guy is positing some whacky theory.
And it’s not like this is the fault of any policy, it’s just a demographic reality.
But compare and contrast that with President Obama’s 2015 economic report:
The United States has just concluded a breakthrough year. In 2014, our economy added jobs at the fastest pace since the 1990s. The unemployment rate plunged to its lowest point in over 6 years, far faster than economists predicted. Ten million Americans gained the security of health coverage. And we continued to cut our dependence on foreign oil and invest in renewable energy, making us number one in the world in oil, gas and wind power.
These achievements took place against a backdrop of longer‐term economic strength. Since the crisis, we’ve seen our deficits cut by two‐thirds, our stock market double, and health care inflation at its lowest rate in 50 years. The housing market is rebounding. Manufacturers are adding jobs. More Americans are finishing college than ever before.
It goes on for another 1,200 or so glowing words and winds up with this:
Over the past 6 years, America has risen from recession freer to write our own future than any other nation on Earth. A new foundation is laid. A new future is ready to be written.
Now, it seems to me one of these guys has to be way off. I’ll let readers decide which one.[[In-content Ad]]
Writing for Americans for Limited Government, a conservative thinktank, he outlined what he called Federal Reserve Chairman Janet Yellen’s “new normal of less than 100,000 new jobs per month.”
He quotes the fed chair during a Dec. 3 hearing in front of Congress’ Joint Economic Committee:
“To simply provide jobs for those who are newly entering the labor force probably requires under 100,000 jobs per month.”
Basically, she was telling Congress that no one should really expect the economy to produce nearly as many jobs as it has in the past.
A new normal of mediocrity, so to speak. She may be right.
Romano notes as recently as 2010, the expectation was a lot higher. He quotes former U.S. Department of Labor Secretary Robert Reich in an op-ed for the Wall Street Journal, writing of “the 150,000 [jobs] needed to keep up with the growth of the U.S. population.”
The statistics point to a sort of demographical double whammy. Lots of people are talking about the fact that America’s workforce is aging and more baby boomers are retiring.
But less often discussed, according to Romano, is that at the same time the growth rate of the working age population is slowing.
He writes:
In the past year, the population of 16- to 64-year-olds has only increased an average 109,750 a month, according to data compiled by the Bureau of Labor Statistics. Comparatively, the average from 1980 to 1981 had it increasing by 198,750.
The demographic of working-age people is shifting and Americans are having fewer children at the same time.
Romano: So, Yellen is actually correct. To keep up with population replacement – since the employment population ratio is always less than 100 percent – will most certainly be under 100,000 jobs per month.
More like 78,000, to be precise, if one assumes 2007’s 71.8 percent employment-population ratio for 16 to 64 years.
That number will drop more in the years ahead because the number of working-age people remains stagnant.
The 71.8 percent employment-population ratio from 2007 mentioned above stands at 68.9 percent today. This accounts for around 4 million jobs lost in the economy since then.
This portends is a troubling trend of labor shortages and declining labor participation happening at the same time. Basically, fewer people looking for work at the same time employers can’t fill jobs they have available.
Romano sums it up:
At the same time economic growth and consumption is slowing down, so too will production. If another recession strikes in the near future, on top of those potential jobs already lost will be possibly millions more. Can you say vicious cycle?
Meaning the new normal articulated by Fed head Yellen may not merely be a benign indicator, but a symptom of long-term economic decline. We’ll know when the next recession hits just how bad it might be. Is there any way out of this malaise?
I am not an economist, but this article makes sense to me. It’s doesn’t seem like this guy is positing some whacky theory.
And it’s not like this is the fault of any policy, it’s just a demographic reality.
But compare and contrast that with President Obama’s 2015 economic report:
The United States has just concluded a breakthrough year. In 2014, our economy added jobs at the fastest pace since the 1990s. The unemployment rate plunged to its lowest point in over 6 years, far faster than economists predicted. Ten million Americans gained the security of health coverage. And we continued to cut our dependence on foreign oil and invest in renewable energy, making us number one in the world in oil, gas and wind power.
These achievements took place against a backdrop of longer‐term economic strength. Since the crisis, we’ve seen our deficits cut by two‐thirds, our stock market double, and health care inflation at its lowest rate in 50 years. The housing market is rebounding. Manufacturers are adding jobs. More Americans are finishing college than ever before.
It goes on for another 1,200 or so glowing words and winds up with this:
Over the past 6 years, America has risen from recession freer to write our own future than any other nation on Earth. A new foundation is laid. A new future is ready to be written.
Now, it seems to me one of these guys has to be way off. I’ll let readers decide which one.[[In-content Ad]]
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