Given the way they bounce around, following the job numbers month-to-month might not always be the best way to get a handle on the health of the economy. Some numbers come in high, some come in low, and it is difficult to step back and see the bigger picture. So let’s compare the September 2011 labor market against the September 2010 one and figure out if yet another year can be thrown on the “Lost Decade” pile.
To start at the beginning, when the economy first tanked it threw a lot of people into unemployment very quickly. The unemployment rate skyrocketed during 2008-2009:
(Click charts to enlarge)
So the economy has had a lot of work to do in stabilizing and then adding to the number of jobs. The recession technically ended in June 2009, and since then everyone has been waiting for the number of jobs to take off. Let’s look at the total number of people employed since then, with an emphasis on the number a year ago:
Employment has gone up just a little bit since it bottomed out in wake of the recession. But it isn’t anywhere near where it was before the recession started. And it really isn’t even that much higher than it was a year ago.
And the population is still growing. How has the employment-population ratio fared?
The percentage of the population working has actually declined over the past year. There’s a technical debate about how many jobs the economy needs to create in order to keep up with population growth, but the short answer is that we aren’t getting anywhere near what we need over the longer run.
Unemployment is down from ~9.6 percent to 9.1 percent. But that good news comes alongside an increase in people who fall into the “out of the labor force” category. The new trend for unemployed workers — that they are more likely to quit the labor force than find a job — has continued during this time.
And with weak job growth, the large cluster of people thrown into unemployment over the past year is slowly, if ever, absorbed back into the workforce. As such, the duration of unemployment continues to grow.
Meanwhile, as many are commenting, another major trend is the decline in the number of government jobs. Beyond the short-term spike in hiring for the 2010 Census, there have been huge numbers of government layoffs during a weak recovery, which puts massive pressure on aggregate demand at the worst time:
Meanwhile, many continue to argue whether this month was good or that month was off. But stepping back, it looks to have been a lost year since last September. In general, we are below the number of jobs our economy can produce, leaving millions unemployed and unproductive. We are treading water with no hopes of serious moves in fiscal, monetary, and housing policies that could kick the economy and get it moving again. When we wonder how a lost decade can pass, remember that a decade is just a series of months one after the other, a series of months where it’s never quite bad enough to jolt action, compiled into years that are tossed down the drain.