What's the world's most precious commodity?
Now, during and before the global financial and economic crisis. And for years -- probably decades -- to come.
Jobs.
Somehow in our rush to fix the stuff that went wrong and caused the financial crash and in our efforts to bring the huge deficits that the financial crisis left us with under control, we seem to have forgotten this. The United States and the economies of the other developed countries of the world weren't producing enough jobs in the boom years before the crisis.
And right now we're not even talking about this long-term jobs problem. Are we really going to be satisfied if unemployment creeps down from 10% to 8% and stays there? That's the "solution" we're aiming for?
Let's at least admit there is a problem. Then maybe we can figure out how to fix it.
And we all know that the U.S. isn't the only developed economy with an unemployment problem. In May, the official unemployment rate was 20% in Spain. In the first quarter of 2010, the official rate was 9.9% in France. In the United Kingdom, it was 8.1% in May. And in each case, just as in the U.S., the official rate understates the full unemployment rate. In those countries, for example, the number of "employed" workers in temporary jobs is climbing as a percentage of the work force.
Of course, we expect unemployment to be high when an economy is coming out of a recession. But we've got a jobs problem even discounting the effects of the recession.
First, unemployment is going to stay high even though this recession has dragged its weary way to a close. Two years from now, the Congressional Budget Office projects, the official unemployment rate in the United States will be 8%. That's twice the unemployment rate in 2000.
Second, it looks like the U.S. economy had dug a big jobs hole even before the recession, and that the current stubbornly high rate of unemployment simply makes an existing problem worse.
Creating a jobs hole
All partisan politics aside, the administration of President George W. Bush had a truly abysmal record of job creation. In eight years, the Bush administration created a net of just 3 million jobs. That record looks especially terrible compared with the 23 million net jobs created during the eight years of the administration of President Bill Clinton. Bush's eight years look bad even in comparison with the administration of his father, George H.W. Bush, which created 2.5 million net jobs in only four years.What's really important isn't just the top-line number but the huge job hole that the U.S. economy dug during George W. Bush's administration. To see the dimensions of that hole, look at the relationship between the number of jobs created and population growth. The second Bush administration created a net 3 million jobs during a period when the population grew by 22 million. Using May's number, 58.7% of the population is in the labor market, so the economy needed to produce almost 13 million jobs from 2000 to 2008 just to keep pace with population growth.
So the United States went into the recently ended recession about 10 million jobs in the hole, and then things got worse. According to data from the Economic Policy Institute, the U.S. lost nearly 7.5 million jobs since the recession started in December 2007. In that same period, the institute calculates, because of a growing population, the United States needed to add 3 million jobs just to stay even. From the December 2007 start of the recession, the U.S. has dug itself an additional hole of 10.5 million jobs.
You can't just add these two figures together to put the size of the cumulative hole at 20.5 million jobs, because part of the two periods overlap and some of the Bush job deficit is included in the recession job losses. But I think it's fair to put the size of the hole somewhere in the vicinity of 15 million to 18 million jobs.
That's an immense hole. One that even the jobs record of the Clinton administration couldn't fill. The Clinton years saw the creation of a net 23 million jobs, but remember that the population grew during that period, too. Using some rough calculations, almost 13 million of the Clinton jobs went to keeping even with a growing population. That would leave just 10 million jobs to fill that 15 million to 18 million hole.
Continued: No job boom on the horizon
