Hah --- You missed the Wall St. Journal today
Keep looking for bad news Willy, its getting harder to find.
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The Great American Jobs Machine
Employment is higher than at any time in history.
Saturday, August 13, 2005 12:01 a.m. EDT
We would like to take a moment to pause and marvel at the U.S. economy. Last week's Labor Department report of more than 200,000 new jobs in July, and two million over the past year, provides the latest bullish details. But the larger story of American job creation, and its causes, is even more impressive.
First, more Americans have jobs today than at any other time in history. Second, over the past two decades or so, the U.S. has created more than 40 million jobs--twice as many as Europe and Japan combined. And third, the U.S. has one of the lowest jobless rates of all developed nations.
It was only a year ago that John Kerry was blasting the "jobless recovery." Lou Dobbs was flogging "outsourcing" every night on CNN as a sign of peril for the American workforce. That criticism now looks wildly off base. The 5% jobless rate today is almost a percentage point below what it was during the same stage of the business cycle during the vaunted "Clinton expansion."
In the past 24 months 3.5 million more Americans have found work, which is the equivalent of a new job for every worker in the entire state of Indiana. Every single job that was lost during the bursting of the technology bubble and stock market collapse of 2000-01 has been matched by a new job, often in a new industry. As the nearby chart shows, the bottom of the jobs recession hit in mid-2003--and the recovery began at the very point that the Bush marginal-rate tax cuts were enacted into law.
But just when it seemed there was reason to celebrate, a new study by the Federal Reserve Bank of Boston warns that the low U.S. unemployment rate is a "false signal" of prosperity. Why? Because American workers are allegedly becoming discouraged in their quest to find work, and this surge in dropout workers brings the real jobless rate to between 6% and 8%. The evidence for a surge in discouraged workers is that the percentage of working age Americans in the labor force has fallen from an all-time high of 67.3% to 66.0% today. If this seems worrisome, it isn't. The average labor force participation rate for the post-World War II period is 63%--well below today's rate.
Labor economist Diana Furchtgott-Roth of the Hudson Institute has thoroughly refuted the Boston Fed study. She finds that "most non-participants are out of the labor force by choice--in school, parenting their children, or retired early." Since one's future wages and employment opportunities are highly correlated with years of education, this trend toward kids staying in school longer augurs well, not poorly, for the next generation of workers.
Ms. Furchtgott-Roth also discovered that the decline in labor force participation for women is mostly a reflection of good economic times and rising incomes. With median family income now above $52,000 a year, more families can maintain a comfortable lifestyle with one spouse working rather than two. Ironically, for years critics of the U.S. economy have complained that Americans are "overworked" and that "it now takes two incomes to produce the living standard that once required just a working father." To the U.S. bashers, it is a sign of decline if more people are working, and it is just as bad if fewer people are working.
Workers do get discouraged from finding a job when they are unemployed for a long stretch of time. But the percentage of "long-term unemployed" workers is about two percentage points lower than it was in the same stage of the Clinton expansion. In Japan and France the share of long-term unemployed workers is three times higher than in the U.S. Germany's rate is four times higher. If America's unemployed are "discouraged," French and German workers must be feeling absolutely suicidal.
None of this is meant to ignore the reality that the rapidly evolving American economy has created turmoil for many workers. In particular, older Americans in declining blue collar occupations are feeling the sting of global competition. We are undeniably losing some manufacturing jobs over time (although manufacturing output has risen as a result of new technology and productivity gains).
But those positions are being rapidly replaced with information, technology and service jobs--most of which pay more than factory work and are less physically grueling. For a quarter century the U.S. has demonstrated an unrivaled capacity to transition into the information age with record numbers of jobs gained, not lost. And we have done so while absorbing millions of baby boomers, women, and immigrants into our workforce with no increase in unemployment.
Part of the explanation for this success is that, especially compared to Europe, the U.S. has imposed fewer taxes and regulations (even though we have plenty) that make it onerous for employers to hire and fire workers. A unique feature of the U.S. economy is that Americans move in and out of jobs--usually to rise up the income elevator--at a rapid and persistent pace. This is the key to the Great American Jobs Machine, and it explains why Europe and Japan should be more like us, and not the other way around.
Two decades? Now the WSJ should stop basking in the pre-Bush years. The metric is how many jobs were created since 2000 when Clinton-Bush made China a permanent favorite trading partner?
What is the net of jobs created and lost vs population growth? What is the growth (or loss) of real income in this same period?
Good post. I just have some general comments.
I read many of these threads (I said read, not study), I believe that critics of the economy are saying the above. I may be wrong. Certainly that is my personal opinion.
I reject the knee jerk reaction of so many that talking about the reality that our "economy has created turmoil for many workers" is tantamount to calling for the government to provide jobs. Then the fireworks begin. Threads become little more than name calling.
Lets talk about BLS details such as categories that created the most jobs; lets talk about the differences between the household and the payroll surveys; lets not ignore Pew Hispanic Center, CIS, and Northeastern University labor studies reports that show recent immigrants (legal and ILLEGAL) getting millions of jobs while citizens and established immigrants remain unemployed. . . . (I've posted them in the past I am not gong to do it on this thread. There will be other threads with the same tiresome name calling.)
HOwever, I will ask for the umpteenth time, given: insourcing provides many good jobs; i.e., foreign companies coming here do benefit us greatly -- that's what good free trade is about.
Now for the question, how can the foreign companies make it here (and sell it here) while our businessmen say that they must outsource offshore (make it there sell it here) to be competitive and import that production for sale here?
The WSJ's spin is almost predictable.
Yeah, "manufacturing" jobs are declining--what a nice concession!! ...and they've been declining since 1950 or so, too--but during the years since MFN-for-Red China, they've been disappearing at an accelerated pace.
Yeah, the economy has fired up the jobs numbers--but the WSJ's claim that "Americans" are the sole beneficiaries should be re-phrased to "US residents." A lot of illegals are ALSO employed--as are plenty of H1-B's.