Employers shed over a half-million jobs in December as the year ended in the grips of a full-blown recession. The total job loss for 2008 went over 2.6 million, mostly in the latter half of the year, as prospects for growth look dim indeed. Even with all of that truly bad news, the AP manages to add a little hyperbole:
The U.S. unemployment rate bolted to 7.2 percent in December, the highest since early 1993, as nervous employers slashed 524,000 jobs.
The Labor Department’s report, released Friday, underscored the terrible toll the deepening recession is having on workers and companies, and highlights the hard task President-elect Barack Obama faces in resuscitating the flat-lined economy.
For all of 2008, the economy lost a net total of 2.6 million jobs. That was the most since 1945, when nearly 2.8 million jobs were lost. Although the number of jobs in the U.S. has more than tripled since then, losses of this magnitude are still being painfully felt.
Uh, okay, thanks for the no-context context. Job losses in 1945 were catastrophic for a nation of 132 million people. We have over 300 million today, and we have increased the workforce by a much larger factor as women have entered the workplace. Total employment in December 1945 was 39.111 million Americans. Total employment in December 2008 was 138.078 million Americans.
For the mathematically challenged, the difference between 2.6 million jobs lost in 1945 and in 2008 is that the former represented a whopping increase of 6.2% in unemployment, while the latter represents a 1.89% jump. It’s bad, but it’s not even in the same ballpark as 1945. And it’s worth noting that the US bounced back nicely in 1946, with unemployment below 4%, and managed to do that without massive new deficit spending by the federal government.
Furthermore, it’s hardly unprecedented. We had more than a decade from 1975 to 1986 when the average unemployment was higher as a percentage than it is now. Three of those twelve years had unemployment higher than 8%, and two of them (1982-3) at almost 10%. In those years, the US had over 10 million people unemployed, worse than now.
How did we fix that problem? Not through nationalization and massive works projects. We pushed investments and cut taxes in order to get capital flowing in the markets, which created jobs through innovation. So far, Washington has proposed the kind of solution that created the stagnation we had in the 1970s and 1980s, which is capital confiscation, based on a panic that will eventually become a self-fulfilling prophecy. We need to quit shrieking and start learning about recessions and the solutions that actually worked — and failed — in the past.