Jobless Recovery Information
A jobless recovery or jobless growth is an economic phenomon in which a macroeconomy experiences growth while maintaining or decreasing its level of employment. The first documented use of the term was in the New York Times in the 1930s.[1]
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Causes
Economists are still divided about the causes and cures of a jobless recovery: some argue that increased productivity through automation has allowed economic growth without reducing unemployment[2]. Other economists state that blaming automation is an example of the luddite fallacy[3] and that jobless recoveries stem from structural changes in the labor market, leading to unemployment as workers change jobs or industries.[4]
Recent employment trends in the USA
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Jobs are constantly being created and destroyed in a dynamic economy emphasizing competition like the USA currently has. As a statistical matter, the low number of net jobs created in the decade 2000–2009 is due to a low number of new jobs created, not due to an especially higher than usual number of jobs destroyed (net jobs is new jobs created minus old jobs destroyed). This was a trend observed even in 1987 and it has accelerated dramatically since, with many US communities dependent on textile manufacturing experiencing "severe hardships".[5][6] But also during that time, a large number of service industry jobs have been created, such as in teaching, in prisons, in food services, in government, in hospitals, and in the computer industry, for an overall continued growth in employment. This reflects comparative advantage.
In the years 2008 and 2009, initial jobless claims in the USA moved up from the usual 350,000 initial jobless claims per week in previous years to 500,000 or more a week.[7][8] This reflected a situation where there was only one new job created for about every six unemployed workers; in some industries the ratio was higher and in others it was lower. This is sometimes depicted as like the "stalling" of some jobs creation engine.[9] This stalling metaphor reflects a political emphasis in a dynamic US economy on creating new jobs rather than preserving existing jobs. It can often be pointless to try to preserve some specific old jobs, as many specific jobs may gradually become obsolete from technological change, like replacing some bank tellers with ATMs. Other jobs may become unneeded from demographic trends, like an aging population purchasing less baby clothes and more hearing aids. This constant turnover in what jobs need to be done is part of the reason that the average person born in the later years of the US "baby boom" (1957 to 1964) held 10.8 jobs from age 18 to age 42, according to the Bureau of Labor Statistics of the U.S. Department of Labor.[10]
Still, even with no net new jobs created during the 2000-2009 decade, the US GDP increased from about US$10 trillion a year in 2000 to about US$14 trillion a year in 2009 (according to the US Bureau of Economic Analysis). This increase in GDP came from several sources. Much came from increased productivity (more produced per worker through automation). Some came from what Jane Jacobs termed "transactions of decline" like increased spending on prisons, wars, and care for the long-term sicken, which is why GDP may be a problematical indicator as to societal well-being.[11][12]
Some mainstream economic analysts suggest the US consumer may be permanently shifting to a lower level of consumption. For example, Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting and investment-banking firm, said:[13] "Suddenly consumers are focused on buying what they have to have as opposed to buying what they want to have... This is a permanent change for Americans, who will face a declining standard of living over the next 20 years..."
Industrial consolidation
Some have argued that the recent lack of job creation in the United States is due to increased industrial consolidation and growth of monopoly or oligopoly power.[14] The argument is twofold: firstly, small businesses create most American jobs, and secondly, small businesses have more difficulty starting and growing in the face of entrenched existing businesses (compare infant industry argument, applied at the level of industries, rather than individual firms).
As a matter of policy, this is particularly attributed to Ronald Reagan, in whose presidency (1981–1989) anti-trust enforcement was sharply reduced.
See also
References
- ^ . Morning Edition, National Public Radio. 16 Oct 2009.
- ^ Automatic Reaction, The Economist, 2010-09-09, http://www.economist.com/node/16990700
- ^ Easterly, William (2001). The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics. Cambridge, Massachusetts: MIT Press. pp. 53–54. ISBN 0-262-55042-3.
- ^ Erica L. Groshen; Simon Potter (Aug 2003). "Has Structural Change Contributed to a Jobless Recovery?". Federal Reserve Bank of New York. http://www.newyorkfed.org/research/current_issues/ci9-8.html.
- ^ The U.S. Textile and Apparel Industry: A Revolution in Progress
- ^ About the U.S. Textile Industry: U.S. Employment Stats
- ^ Chart of Initial Jobless Claims
- ^ Jobless Claims Jump To 3-Month High, In Latest Troubling 2010 Economic Data
- ^ America's Job Creation Engine Was Stalled
- ^ Number of Jobs Held, Labor Market Activity, and Earnings Growth Among the Youngest Baby Boomers: Results From a Longitudinal Survey Summary
- ^ Moroz, Harry (September 16, 2009). "Measuring Measurements: Rising GDP in the Great Recession". Huffington Post. http://www.huffingtonpost.com/harry-moroz/measuring-measurements-ri_b_288701.html. Retrieved 2011-08-10.
- ^ Kevin P. Phillips (May 2008). "Numbers racket: Why the economy is worse than we know". Harper's Magazine. http://www.harpers.org/archive/2008/05/0082023. Retrieved 2011-08-10.
- ^ Economy Forces Major Shift in Spending
- ^ Who Broke America’s Jobs Machine? Why creeping consolidation is crushing American livelihoods., by Barry C. Lynn and Phillip Longman, Washington Monthly
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