Job Market

September 4, 2011 at 12:20 pm (By Randy)

The US has roughly the same number of jobs today as it had in 2000, but the population is well over 30,000,000 larger. To get to a civilian employment-to-population ratio equal to that in 2000, we would have to gain some 18 MILLION jobs.

– John Mauldin in Business Insider


  1. wj said,

    Mauldin talks about the drop in the percentage of men (age 20-64) who are “in the workforce,” i.e. working or wanting work. But takes no account of the increase, over that time, in men in that group who were enrolled in education. Perhaps he missed the memo on the growth of the percetnage of adults enrolled full time in college. That is, I suspect, at least part of the story — and he shouldn’t be counting them among those who simple don’t want to work. But that is, admittedly, a net.

    More importantly, if you look at his third graph, something interesting emerges. When the economy is not in recession, the percentage employed grows back towards the level that was the norm in the 1950s (which he seems to use as a baseline). And, just eyeballing it, the rate of growth looks to be pretty much the same each time. What changes is the size of the drop in employment during recessions. Unsurprisingly, if the drop is bigger, and the rate of growth during recovery is similar, it takes longer to get back to the baseline rate of employment. And if, as the graph shows, you hit another period of rising unemployment before you get there, the long term trend looks like dropping employment.

    The graph for women is similar, except that the growth rate is much steeper (and the rate of drop during recessions shallower) than for men, at least until the beginning of this century. At which point the graph for women starts looking much like the graph for men. The only difference being that the rate peaks in the high 70% range, rather than the male baserate in the mid-90% range. Which is probably unsurprising, given that women are still more likely to be full-time homemakers and/or child rearers than men. (There may be other cultural reasons as well.)

    Looking at all of that, I would suggest that the problem is not really that “we are not creating enough new jobs.” Rather it is that, during recessions in the past couple of decades, more jobs are going away than did during the recessions of the mid-20th century. I’m not entirely sure why that might be. However I suspect that one reason is the increasing ability to automate jobs. Which means that the constraint to letting people go during a downturn, that you lose expertise which is hard to replace when things pick up again, has weakened. Or, at least, weakened in the minds of the people who run the companies.

    And that suggests that, if we want to reverse the trend in the long term, we don’t want to focus on job creation. Where we want to focus is on reducing job loss — which is a whole different issue, and likely with very different policy implications.

  2. realpc said,

    “Where we want to focus is on reducing job loss”

    So you want to avoid losing jobs that were not necessary? In order to have people continue working at jobs that could be automated? And why do we expect the number of jobs to increase as the population increases? And why do we think it’s ok for the population to continue increasing? The purpose of a job is to get some kind of work done, in order to accomplish something that for some reason someone wants to accomplish. And yet we now have it all backwards — we think the purpose of a job is to give a person something to do that they can be paid for, so they can survive.

    If there are not enough things that someone wants to accomplish in a certain place, and there are people hanging around in that place with nothing to do and no way to survive, the normal result is that people stop coming to that place expecting to find jobs!

    If you stop and think about this you might see that we are taking some bizarre ideas for granted. All throughout the natural world, and most of human prehistory and history, animals and people have gone seeking for ways to survive. But now we expect them to go wherever they want and reproduce as much as they want, and somehow ways to survive should just appear.

    And furthermore — did you ever notice how many things really do need to be done, or it would be nice if they were done, but no one does them? An unemployed person might sit around for years waiting and hoping to be hired for something, while completely ignoring all the obvious work they could do.

    So now the US president is supposed to be supplying ways to survive for anyone who needs it. While the population sits around reproducing and waiting.

  3. Randy said,

    Realpc: This is a reminder. Nothing has changed since then.

  4. wj said,

    realpc, I’m not suggesting keeping jobs which are not necessary — that is, jobs which wouldn’t be necessary even if the economy came back to what we like to think is normal. But are all of the people being laid off doing those kinds of jobs? In a word, no.

    How many times have we heard about companies making “across the board” cuts in budget or staff? This is often sold/justified as “share the pain,” ut what it actually is is an abdication of management’s responsibility to do its job. Not all areas of most companies are equally productivce or equally profitable. If you cut 10% off of your most profitable division, just so you can “share the pain” instead of eliminating the least profitable division, you aren’t doing your job.

    And, when the decision is actually made to close down the least profitable division, how often does management show any signs of recognizing that their most productive employee in that division might, just might, be more valuable than the least productive employee in another division? Essentially, never. If a division is closed, all of the employees there get laid off, regardless of how good they are. (The same applies to managers, too. Maybe the VP in charge of that division was part of the problem. Then again, she may be the best manager you have, and been put there to try to turn it around in time. But she gets sacked along with her division anyway.)

    Furthermore, in my experience an awful lot of decisions of who to let go are made without regard, more likely without knowledge, of which employees are actually the most valuable. (Which may be why the situation in the previous paragraph occurs.) More often, the assumption is that all employees, at least all of the employees in a particular area, are totally fungable. So the “obvious” thing to do is lay off the highest paid ones. Even if that results in knowledge that is available nowhere else walking out the door at the same time. And yes, that applies when companies outsource, too. It’s hardly unusual for them (or the company they outsourced to) to be coming around, a year or two later looking for exactly the expertise they let go of.

  5. wj said,

    And to speak to your second point, I would say that the ideal job is one where you get to do something that you love doing, and get paid well for it besides. But there are some obvious difficulties with having everybody get to do that. For openers, a lot of people are simply unaware of what job they might actually love doing. (At least, I had no idea when I was 20 about the existance of the job I ended up loving to do for 4 decades. maybe others are smarter about such things.)

    As for jobs increasing with population, probably not exactly. But to some extent the work to be done has to increase as the number of people for whom it is being done increases. To give a simplistic example, if you double the number of houses in a given area (due to the population doubling), the number of house painters or plumbers you need to maintain them goes up at pretty much the same rate. (There is also some reduction due to increases in productivity, but those would occur regardless of the change in population.) The assumption that there is only so much (paid) work to do is what economists call theLump of Labor fallacy.

    There is, as you say, a fair amount of work which needs doing but nobody is doing it. But it might be worth asking why that is. A couple of possibilities:
    — there aren’t enough people available with the expertise to do it.
    — there isn’t a specific individual (or company) which benefits from it enough to pay for it. (“The tragedy of the commons.”)
    — there are perverse incentives, e.g. from government policies, which make paying to get it done uneconomic . . . even though, absent those incentives, it would be economic.

    In either of the latter two, the only way it gets done is if the government steps in. Which, given the probable strength of the lobby which created whichever policy is the problem in the last example, probably means the government paying to have it done. It is silly to put all of the responsibility for that happening on the President (or Governor, or Mayor), since it is going to call for legislative action to actually implement. But action by the government is going to be required, unless you see a reliable way to get it financed by charity.

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