A Jobs Report With Not Enough Jobs
In my column for the National Post, I explain why there were not enough new jobs in the latest jobs report:
An important milestone contained in Friday’s U.S. jobs report:
This month, for the first time, President Barack Obama can say more Americans are working than were working on the day he took office (using the more reliable figures for seasonably adjusted numbers.)
With state and local government payrolls down by 500,000 since January 2009, the President can further say that all of this recovery has taken place in the private sector.
Of course, recovery only to January 2009 levels won’t be much of a recovery at all. The great bulk of the private-sector jobs lost in the Great Recession were lost between October 2008 and January 2009, before Obama took office. At the current pace of job creation, it will take close to three more years before total employment recovers to the levels that prevailed in the fall of 2008 — never mind catch up to population increase from births and immigration.
In this slack labour market, wages are lagging even for those Americans who do have work.
Adjusting for inflation, the average American worker was paid less in February than a year ago — largely because so many of the newly created jobs are low-wage jobs.
Add those data points together, and you see this image of the future: An American economy characterized by chronic under-employment for years to come.
The U.S. does not offer much in the way of social benefits to the chronically unemployed. In the past, this tough policy made a lot of sense: It pushed the unemployed to take work, any work, rather than depend on social services.
But what if there isn’t work, any work?
Right now, there are 4 job seekers in the U.S. for every job-vacancy. That ratio represents an improvement from the nadir of the recession, when there were 5.5 job seekers for every vacancy. But today’s 4:1 ratio remains a shocking, unprecedented number. During the fearful recession of 1981-82, the last previous bad U.S. recession, the ratio never exceeded 3:1. In normal times, the ratio hovers a little above 1:1. (During the boom years of the late 1990s, the ratio went into reverse: for every 10 job vacancies, only 7 people were looking for work.)