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U.S. EMPLOYMENT PEAKED in December 2007. The month
marked the end of a weak and relatively short period of job growth.
This period generated a 6% increase in payrolls and lasted for 52
months. The growth phases of the eight earlier bust-and-boom employment
cycles since 1948 produced average payroll gains of 18%
and lasted an average of 67 months.
Prior to this one, the two most recent job upturns—from 1982 to
1990 and from 1991 to 2001—both posted payroll gains of close to
23% and lasted for 90 and 117 months, respectively. The down phase
of the first eight job cycles lasted an average of 12 months. For the
just completed ninth cycle, it took 30 months to hit bottom.
These sobering statistics and the near-halt to growth in the
gross national product in the fourth quarter of 2007 should have
brought an end to denial and obfuscation about the economy. But
they apparently haven’t.
In recently acknowledging some economic weakness, the Bush
Administration still boasted that the latest job recovery beat the
previous record of 48 months of uninterrupted month-to-month
gains. This is true but misleading.
During the boom phase of earlier employment cycles, payroll
estimates occasionally showed isolated and tiny month-to-month
declines. But they did not break the upward momentum. More
than four years of uninterrupted growth may be a talking point. But
what matters about an employment upturn is not perfect uninterrupted
growth but how long it lasts and how many jobs it generates
in the end.
The publisher of Forbes, the self-styled “Capitalists’ Tool,” as
recently as last month assured the magazine’s readers about four
economic matters they need not be pessimistic about. To wit:
■ The 70% of Americans who believe the U.S. is on the wrong
economic track—because they are essentially the same 70% who
disapprove of the Bush presidency in general and so are not commenting
just on the economy.
■ What the media is reporting about the economy—because it is
an election year and the “out party” always exaggerates anything
negative about the economy, and the media goes along.
■ What business journalists write anyway—because they are mostly
incompetent, antibusiness, and left-of-center.
■ The subprime mortgage crisis—because the related losses are
not large. “In any typically volatile trading day, U.S. stocks gain
and lose [as much] every hour,” the publisher writes.
Incidentally, in the same Forbes issue, the editor-in-chief
proclaimed there is “no way” carbon
dioxide has anything to do with world temperature
changes.
For Democrats, a tempting partisan explanation
for what’s going on with the economy is
that it’s what you’d expect when a Republican is
in the White House. A ranking of the four-year
presidential terms since 1948 by the percentage
payroll gains they witnessed reveals that the six
CHEMICAL HINDSIGHTS
Job Market Blues
Economic slowdown, job dip, and changing world economy should bring
critical analysis of the OUTLOOK FOR THE DOMESTIC WORKFORCE
MICHAEL HEYLIN, C&EN WASHINGTON
What matters about
an employment
upturn is not perfect
uninterrupted growth
but how long it lasts
and how many jobs it
generates in the end.
WWW.CEN-ONLINE.ORG 37 APRIL 14, 2008
Democratic terms take six of the top seven spots. Republicans take
fourth and the lower eight positions.
Striking as these data may appear, they do not establish cause
and effect. There are too many complications, such as the finite
economic powers of the White House and the times Congress and
the presidency are split between the parties. And when there has
been a party change in the White House, there is the inevitable cry
from the new Administration that it was left an economic mess.
The counterclaim by those leaving is that any economic success
that the newcomers may enjoy is due to the solid economic foundation
they were handed.
The current wars are probably not a factor in the job downturn;
the U.S. has a record of flourishing during wartime. Demographics
are not a factor because the workforce continues to grow at a
steady pace. And although all data from the Bureau of Labor Statistics
may not be ideal, the agency is widely regarded as scrupulous,
consistent, and credible with its measures of employment.
This puts focus on the current turmoil in the financial and credit
markets and the devaluation of the dollar—which aren’t helping—
as well as on technological change, worldwide competition, and
the outsourcing of jobs overseas. Was 1992 third-party presidential
candidate Ross Perot onto something with his little charts and his
alarm over the “giant sucking sound” of U.S. jobs going overseas?
WHAT ARE THE IMPLICATIONS of an economy able to generate
ever- increasing wealth, mostly for those who can afford it, without
consistently generating enough living-wage jobs to keep up with
population growth?
Despite some painful times, the U.S. did quite well from 1948
to 2000 overall. Payrolls fell for only 15% of the time and never by
more than about 3% in the past 50 years. Percentage payroll gains
during the upturns since 1948 exceeded losses during the downturns
by 6 to 1.
During the 2001 to 2007 cycle, however, payrolls declined 37%
of the time and payroll gains exceeded losses by a narrower 3 to 1.
The relatively high labor costs in the U.S., combined with today’s
technology and the new phenomenon of a truly competitive
world economy that technology is rapidly engendering, do not augur
well for the domestic workforce.
Avoiding a tipping point for U.S. employment will be a great
challenge to the nation’s policymakers, business leaders, and science
technology communities. How long can faith
in the ability to provide services and to produce
goods ever more cost efficiently—which includes
the lowest possible domestic labor costs—continue
to be seen as the bedrock of a sustainable
and healthy U.S.? Maybe it is time to think more
broadly.
Views expressed on this page are those of the
author and not necessarily those of ACS.