http://www.economist.com/agenda/displayStory.cfm?story_id=2454530 So what is really happening? Three themes emerge: •Although America's economy has, overall, lost jobs since the start of the decade, the vast majority of these job losses are cyclical in nature, not structural. Now that the economy is recovering after the recession of 2001, so will the job picture, perhaps dramatically, over the next year. •Outsourcing (or “offshoring”) has been going on for centuries, but still accounts for a tiny proportion of the jobs constantly being created and destroyed within America's economy. Even at the best of times, the American economy has a tremendous rate of “churn”—over 2m jobs a month. In all, the process creates many more jobs than it destroys: 24m more during the 1990s. The process allocates resources—money and people—to where they can be most productive, helped by competition, including from outsourcing, that lowers prices. In the long run, higher productivity is the only way to create higher standards of living across an economy. •Even though service-sector outsourcing is still modest, the growing globalisation of information-technology (IT) services should indeed have a big effect on service-sector productivity. During the 1990s, American factories became much more efficient by using IT; now shops, banks, hospitals and so on may learn the same lesson. This will have a beneficial effect that stretches beyond the IT firms. Even though some IT tasks will be done abroad, many more jobs will be created in America, and higher-paying ones to boot. Just you wait The “jobless recovery” first, then. Despite strong productivity growth and an accelerating recovery from the recession of 2001 (the economy grew by an annual 4% in the fourth quarter of last year), jobs are being created at a feeble rate of 100,000 or so a month. The jeremiahs point out that a net total of 2.3m jobs have been lost since Mr Bush came to office. Although this date is often used as the starting-point from which to make a comparison, it is a silly one. In early 2001 the hangover effects from the investment boom of the late 1990s were only starting to be felt. Unemployment, at 4.2%, was unsustainably below the “natural” unemployment rate, consistent with stable inflation, that most economists put at around 5%. In other words, perhaps two-thirds of those 2.3m jobs were unsustainable “bubble” ones. Given the scale of job losses—along with the shocks of a stockmarket bust, corporate-governance scandals and terrorist attacks—it is a wonder that the recession was so mild. By the same token, a mild recession is now being followed by a commensurately mild recovery. This week, the White House retreated from a claim that 2.6m new jobs would be created this year. But there are reasons to think that job growth will be more robust. In particular, the remarkably strong productivity growth, running at twice its long-run average of 2.1%, must slow down eventually. In the face of rising order books, businesses will have to hire more workers. This may already be happening in some parts of the country. William Testa, director of regional research at the Federal Reserve Bank of Chicago, points out that the downturn began in the mid-west (because of its relative emphasis on manufacturing, notably business equipment, the mid-west was hit first by the slump in business investment) and then spread to the coasts. Now a recovery is spreading in the reverse direction—starting on the coasts and ending up, alas for Mr Bush, in the key electoral states of the industrial heartland. In the absence of an obvious jobs recovery, it is perhaps not surprising that the myth arose that the American economy was being buffeted by structural, not cyclical, forces. Yet it nevertheless is a myth—as three notable economists, William Baumol, Alan Blinder and Edward Wolff, point out in a recent book.* Churning, they point out, has being going on in the American jobs market for years, and “the creation of new jobs always overwhelms the destruction of old jobs by a huge margin.” Between 1980 and 2002, America's population grew by 23.9%. The number of employed Americans, on the other hand, grew by 37.4%. Today, 138.6m Americans are in work, a near-record, both in absolute terms and as a proportion of the population (see chart). ------------------------------------------------------------------------------------ Basically, I think it is pretty silly to rip on Bush for the loss of jobs in the past three years. Yet we see intelligent posters doing it regularly. I don't understand why, when there are so many other real issues you can rip Bush for...
cyclical? what cycle are they refering to ? the last time a President lost more jobs than were created was Hoover so this is that dreaded 70-year economic cycle we were all taught?
thanks for posting this- i got my copy friday and thought this was a great article. gives the lie to the myth of the jobless recovery.
A great read, but you may need Cliffs Notes for the Liberals around here... Bottom line, this should stop the ridiculous posting of this topic...but probably not...
A great read Well, except that it wasn't. At least not if you're looking at reality. <B>Never</B> have there been net job loss 2 years into a recovery. But yeah, it's a cyclical thing.
Exactly what part of this is Bush's fault/responsibility? My brother-in-law runs a furniture manufacturing company. They have closed down four of five US-based manufacturing plants and moved them to China so as to stay competitive with events that were set in motion many years before President Bush took office.
fact: Wall Street has bounced back (not quite to it's peaks of the late 1990's, but whatever, it's good). fact: We are still down 2 million jobs during this economic slow down. reasonable view: it appears to be a recovery without jobs. reasonable view: it appears to be a recovery that will take a little extra time for the hiring to start up in a big way. total opinion: Bush is an idiot, and his plan will never get our jobs back! total opinion: it's not a jobless recovery, you idiots! You and your liberal lies! Come on, this is not hard. Let's stick to the facts as much as we can please.
Didn't a lot of these jobs go away before Bush became president? My brother in law terminated hundreds of manufacturing jobs in North Carolina.. and it had nothing to do with President Bush. What could President Bush do to get those jobs back? They are in China where new manufacturing plants have been built and workers don't have two cars, cable, a mortgage et al.
There is no doubt that some people lost jobs under Clinton. But the overall job situation ended up with a gain. We are talking about what has happened since Bush came to office, and the over all job situation is at a loss.
since it involves the future tense for an important part of it: NO. Facts are established in the present and past, last I checked. ima, we simply do not KNOW if *this* recovery is going to bring along tons of jobs. How does anyone know? We're down a couple million. Let's hope the best, all of us.
Are we applying the same kind of scrutiny to the job situation under Clinton as we are to those under Bush? Manufacturing jobs have been leaving this country for 25 years and it has nothing to do with who is in the Oval Office. In other words, if we are going to be unfair to President Bush, let's be equally unfair to ex-President Clinton.
I agree that it's a reasonable argument to make that jobs went out of the country during Clinton's term as well. But since employment was still climbing then the effects, as a whole, weren't felt as dearly as it is now. Sure there are some people who didn't have a prosperous 90's and lost their jobs and didn't get other ones, but that's not true of the country as a whole under Clinton. Under Bush people have lost their jobs and not gotten new ones. I guess what I'm trying to say is that they are two seperate, but related issues. 1. Exporting of jobs = bad: Clinton(F) Bush(F) 2. Overall rise in employment = good: Clinton (A) Bush(F) It's one thing to ship jobs over seas when people are still working. It's another to ship them away when there aren't any to replace them.
Are we applying the same kind of scrutiny to the job situation under Clinton as we are to those under Bush? Manufacturing jobs have been leaving this country for 25 years and it has nothing to do with who is in the Oval Office. In other words, if we are going to be unfair to President Bush, let's be equally unfair to ex-President Clinton. The problem is that Bush is wrong on everything he touches. Clinton said "our plan will create x jobs" - and lo and behold, x jobs were created during that period. Bush said his tax plan would create something like 1.5 million jobs last year. Didn't happen. He was wrong on jobs. He was wrong on Iraq. He was wrong on the cost of his Medicare plan. He's wrong on virtually everything he touches. So the question is ... when he says now that his economic plan will create 2 million jobs this year, why should anyone believe him? Anytime he announces a new initiative and says it will accomplish something, why should anyone believe him? Is there any point at which he should be held accountable for the things he claims?
Okay, the Bush administration screwed up. They promised a huge increase in employment and it hasn't happened. They were wrong. Hang em out to dry. Next. To the point of the article that interested me - full employment. When I was in college (94-98), I vaguely recall my Econ profs referring to full employment as somewhere around the ~5-5.5% range. If that is in fact the case (and I believe historical data shows that to be fairly true), something astounding happened during the Clinton years. The question, is what really happened? Did Clinton manage to do amazing things for business and transform the economy? Or did a stock market bubble (caused by a number of factors) cause a misallocation of capital, thereby allowing investors to give new businesses money to develop stupid ideas (and in the meantime employ people who may not have otherwise been employed) and encourage new job seekers to seek training in the wrong industries? I don't have time to do the research, but I would love to see employment data by industry, particularly raw data that shows total employment and total job seekers for major industries (i.e. financial services, technology services, technology manufacturers, industrial manufacturers, consumer products, automotive, etc.). If the employment drop happened across all industries, that sends one message. If job loss is focused in a few specific industries, that probably has a very different message. That's a big request, but I haven't had a slow day at the office in a while (we're hiring!!). If anyone does and can find that type of information, it would be nice to see it.
