Employment at the End of a Decade
On January 8, 2010, the US Department of Labor reported that nonfarm payrolls (jobs) decreased by 85,000 in December while the data for November was revised upward and now shows a gain of 4,000 jobs. This chart posted at chartoftheday.com on the same day illustrates the percent increase in the number of jobs for every decade since the 1940s (the data goes back to 1939). Between 1950 and 2000, the number of jobs at the end of a decade was anywhere from 20% to 38% greater than 10 years prior. However, in the case of the decade just the percentage gain in jobs in the US economy barely perceptible.
The big question now is whether we will see significant employment growth over the next few years. Some analysts believe that many firms over reacted during 2008 and 2009 and that jobs will come back fairly quickly if the financial system and economy continues to stabilize. Others say that there was a lot of dead wood and that many of the net 7 million jobs lost over the past two years are never coming back.
If you think, as some analysts do, that the 7 million jobs lost can be recovered in three years, that means you are counting on the addition of nearly 200,000 jobs per month. To put that in perspective, job creation in the USA averaged 151,000 jobs per month in the 1980s and 181,000 jobs per month in the 1990s. So, achieving 200k net new jobs per month seems a bit optimistic.
And to really knock the unemployment rate down, we need even more jobs to absorb the increase in working age population--something on the order of an additional 100,000 jobs per month. So, unless some as yet unforeseen boom comes along, it is likely to take more than half a decade of reasonably good times to get the unemployment rate down to anywhere near what it was before the recession began in December 2007.
I think this CNN/Money.com overview posted on January 7, 2010, offers a fair assessment of the employment situation -- http://money.cnn.com/2010/01/07/news/economy/jobs_outlook/index.htm .
