Our statistical recovery is truly a wonder to behold. Gross Domestic Product (GDP) has now reached its pre-recession (2007:Q4) level, but has done so without restoring about 7.5 million of the jobs lost since then. Job gains are supposed to come later we are told. This is the famous "lagging indicator" you've heard about. This hopeful expectation, along with $1.49 (+ tax), will get you a cup of coffee at Starbucks.
In Why the January Jobs Report Is Alarming, David Stockman looks at our job creation prospects based on the historical data. His view basically says that there may not be many new jobs created in the next decade—this is the "new normal" for jobs.
The January nonfarm payroll number was 130.27 million — a figure first reached in October 1999. That’s right! The fabled American job machine has come to resemble nothing so much as Cisco's stock price. For the last 12 years, the nonfarm job count has been revisiting the same point over and over again, and each time it crosses from below Wall Street economists put on their best [Cisco CEO] John T. Chambers imitation and whoop it up for job growth...
... no amount of weather-spinning can obfuscate the dismal facts about the medium-term jobs trend — to say nothing of any net job gains since the last century! Specifically, during the December 2007-June 2009 official recession period, we lost 7.3 million nonfarm payroll jobs, bringing the nonfarm payroll count to 130.64 million at the point the National Bureau of Economic Research (NBER) said recovery officially commenced. But after 19 months of green shoots, we now actually have 400,000 fewer jobs.
And, yes, employment is purportedly a lagging indicator, but it is simply off the historical charts to have the job count down 5.5% at a point that is currently 37 months after the cyclical peak.
Regardless of what the precise numbers are, no amount of spin can hide the fact that 19 months after the NBER said the recession was over, job creation has stopped, as in halted, ceased, not moving forward, standing still. Stockman's reading of the BLS data is consistent with the Gallup polling results.
Still, Gallup's measures paint a real-time picture of the current job realities on the ground: nearly 1 in 10 Americans in the U.S. workforce are unemployed, nearly one out of five are underemployed, and the nation's overall hiring situation has not improved over the past four to six months.
Stockman includes three historical graphs describing the current jobs situation. I am going to duplicate those graphs along with his comments in the hope that this depressing data will garner wider attention.
"... the Breadwinner Jobs graph tells the real story. It goes back to January 2000 and covers the long “Greenspan Boom” through December 2007, the two-year Great Recession through December 2009, and the “New Normal” representing the last 13 months of alleged “recovery” as of the January 2011 report. First, there were slightly less than 72 million Breadwinner Jobs before the 2001 recession and the same number by the time the Greenspan Boom peaked in December 2007. Put differently, the greatest financial boom in US history did not generate a single net job in the core middle class economy. Then, 6.6 million, or nearly 10%, of these jobs were eliminated during the 24 months of the Great Recession. And as of 19 months after it ended, we have lost another 217,000 Breadwinner Jobs."
"The short story is that 573,000, or fully 85%, of the 677,000 nonfarm jobs that have been created since December 2009 are in the Part-Time Economy. These are the low-pay third-of-a-job entries in the BLS reports which excite the high-pay Wall Street spin doctors who show up at 8:30 a.m. on the first Friday of each month to peddle buy, buy, buy. The Part-Time Economy graph is a testament to the capacity of Wall Street economists to gum endlessly about comparatively meager concepts. For five years during the boom they jabbered about the economy’s amazing jobs fecundity, only to have the 2.5 million “one-third” jobs created in this sector through December 2007 completely disappear during the next 24 months of downturn. Moreover, after full credit for 85% of the job recovery since December 2009, even the count of low-pay part-time jobs in the US economy is hardly statistically different than it was at the opening of the 21st century."
"Finally, a word on the HES Complex [health, education and social services] jobs completes the picture. This sector has been the American economy’s jobs evergreen. During the seven years of the Greenspan Boom, about 66% of the total gain — about 4.7 million jobs — was attributable to health, education and social services. There remains a mystery as to how we pay for $2.5 trillion of goods and services we import from the rest of the world each year based on what is overwhelmingly a cradle-and-grave job market; that is, one focused on educationally nurturing citizens before they enter the job market and providing health-care palliatives afterward."
As Stockman notes, it is hard to see how the continued growth of HES jobs will continue in the face of inevitable state and federal budget cuts. Almost all (85%) of the jobs created since December, 2009 have come in the "part-time economy". These are the lowest paying jobs. As for "breadwinner" jobs, those jobs on which earners can truly support a family, our economy has lost about 6.8 million since December, 2001. It's probably safe to say that those jobs are gone forever.
We had a phony economy during the "Greenspan boom" Stockman refers to. The real difference between now and late 2007 is that we've lost the artificial lift provided by the Housing Bubble. The NBER and the GDP number say "the economy" is recovering, but those living in it outside Wall Street and Washington know better.
A "recovery" has not truly begun until all the jobs lost during the phony boom years are replaced. Using this criteria, when will America's economic recovery truly begin? Perhaps by 2017, perhaps by 2019. But if Stockman's historical trends continue, the real is answer is almost certainly never.