Chart of the Day

Ezra Klein calls this “the scariest jobs graph you’ve seen yet,” and for good reason.  The center-left Brookings Institute calculated what kind of job growth it would take to reach pre-recession employment levels, and how long it would take. Brookings takes into account population growth and therefore calculates that in this month, the total employment gap has expanded to 11.2 million jobs.  According to their analysis, adding jobs at a rate equal to the best average monthly rate for any one year in the past decade will mean we won’t catch up to pre-recession employment until 2022 (via Newsalert):

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Looking ahead, there are several challenges to sustained job growth. The boost to economic activity from the American Recovery and Reinvestment Act is winding down and job losses related to temporary Census workers will continue in July. Further, the four-week moving average of initial claims for unemployment insurance have hit their highest level since March and have remained above 450,000 all year.

The “job gap” underlying these numbers is daunting. In recent months, on this blog, we described the job gap — the number of jobs it would take to return to employment levels from before the Great Recession, while also accounting for the 125,000 people who enter the labor force in a typical month. After today’s employment numbers, the job gap stands at almost 11.3 million jobs.

How long will it take to erase this gap? If future job growth continues at a rate of roughly 208,000 jobs per month, the average monthly job creation for the best year for job creation in the 2000s, it would take 136 months (more than 11 years). In a more optimistic scenario, with 321,000 jobs created per month, the average monthly job creation for the best year in the 1990s, it would take over 57 months (almost 5 years).

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What has been the rate of job creation during the Obama administration?  Er … -181,000 per month, but that includes the entire 2009 year.  If we start in 2009Q4, when Obama argued that Porkulus and his other economic policies started taking effect, the rate of job creation under his policies has been … +39,000.  Bear in mind that this includes the massive Census Bureau hires made by the Obama administration in 2010.

How about just the private sector?  The Brookings calculation isn’t limited to the private sector, so it’s a bit like comparing apples and oranges, but few people doubt that private sector jobs have to return in force to close the jobs gap.  The average monthly growth in the private sector during the entire Obama term has been -192,000, and the average growth since the beginning of 2009Q4 has been +14,000.  In other words, two-thirds of the growth numbers from Porkulus come from government hiring, not private-sector growth.

How long will it take to close the employment gap with a growth rate of +14K in the private sector?  It’s flat-out impossible, because we’re digging the hole deeper each month at that rate.  Under the failed Keynesian policies of the Democrats in Congress and the Obama administration, 2022 looks like a pipe dream instead of a nightmare.

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