Employment and a Lost Decade? A Warning on Data Analysis
Some say that we have added no jobs in the past 10 years, and they are calling it a "lost decade." What they see is a product of bad data analysis. Here's the actual U.S. employment data, plotted in blue:
Actual data in blue. The green line goes from December 1999 through December 2009, showing virtually no growth in a decade. But it's always to calculate changes from a peak to a trough if you want to understand long term trends. The economy's ability to generate jobs over a long period of time is better examined by looking at peak-to-peak growth, which is the purple line.
So, you can say that we ended the decade at the bottom of a business cycle, but everyone already knew that. Or you can say that the economy grows jobs over the long run, but not during the down stage of a business cycle. I think the latter statement is more useful.
Going forward, businesses should recognize the slower growth of the working age population that we'll have in the 2010s. Plenty of companies are planning on expansion, but won't find the workers easily, unless they start thinking about this challenge ahead of time. (A year before the recession, I wrote about 6 Steps to Hiring in a Tight Labor Market. It's useful to read even before the market tightens.)
Comments
Question Bill:
boomers can’t retire as soon as they’d like because of their household wealth (retirement and home values) was severely reduced. they’re thrifty spenders by nature. college grads can’t find work in record numbers because job growth is anemic at best. BLS U-6 is persistently high. the average consumer isn’t spending nearly as much in the past and their borrowing is pared way, way back.
How does this all impact your analysis, if at all?
Is it really so that “plenty of companies are planning on expansion”? I hope you’re right, but over the short run the uncertainty would still seem to be keeping a lid on actual additions labor and plant, as opposed to increasing production with the assets already in place.