We seem to be getting conflicting messages about the trends in America's job market. While unemployment levels are down, albeit still not to levels that are anything close to normal inter-recessional levels, and job creation is up, something still doesn't feel quite right. A brief summary by Gary Burtless at the Brookings Institute may give us a bit of a hint about what is wrong. Please note that the data quoted on this posting comes from the Bureau of Labor Statistics Household Survey.
As I like to do, let's open by looking at a graph from FRED that may help us understand where the problem lies:
In December 2007, right at the beginning of the latest recession, there were 153.918 million Americans in the civilian labor force. This fell to a low of 153.120 million in December 2009, just after the official end of the Great Recession. It then rose to a post-Great Recession high of 155.835 million in June 2013, an increase of 2.715 million workers or 1.8 percent from its low point. Unfortunately, since that then, the number of employed Americans has dropped significantly to October's level of 154.839 million for a loss of 996,000 or just over a third of the jobs gained since the post-Great Recession low point. Admittedly, some of these losses can be attributed to the federal government shutdown since the Household Survey treated these laid-off federal workers as though they were on temporary layoff and consequently, unemployed. That said, comparing the number of employed Americans in both January and September 2013, we find that there were 95000 fewer employed Americans in September than there were in January. We also find that, in total, between December 2009 and September 2013, there was only an increase of 2.439 million workers in the labor force, an average increase of only 610,000 annually. This can hardly be termed "robust employment growth" can it?
Here is the same data showing the percentage change in employment levels on a year-over-year basis for the same time period:
Here is yet another way of looking at the change in the number of employed Americans; the monthly change in the number of civilian employees:
The best that one can say is that 2013 has been a very modest year for job creation, particularly when one looks at the month-over-month employment changes over fifteen years prior to the Great Recession:
If you compare the last two graphs, you will notice that until the Great Recession, America's workforce benefitted from relatively long periods of monthly employment gains with only very short periods of month-over-month workforce contraction. Since the end of the Great Recession, the number of employed Americans has decreased from one month to the next nearly as often as it has increased.
Lastly, here is a look at the ratio between employment and population since the beginning of 2008, keeping in mind that the higher the ratio, the better:
It certainly would appear that population growth is outstripping employment growth, wouldn't it? How can it be considered a robust job market when creation of jobs is barely keeping pace with a rise in the number of working age Americans?
Despite Mr. Bernanke's hard monetary policy "work" , America's employment situation is hardly healthy. One should be rather apprehensive when one thinks about what will happen when the Federal Reserve begins its much anticipated tapering.
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