Not All Employment Is Created Equal, but Numbers Are Up
Oct. 10, 2012
Last week's news that unemployment dropped to 7.8 percent prompted a form of schizophrenia among some conservatives who asserted that the numbers weren't that good, and also that they had been fabricated to help President Obama.
Former GE chairman Jack Welch claimed Obama's team had somehow cooked the books. His proof? Welch said he talks with a lot of business leaders, and they tell him they aren't hiring.
Turns out there's a reason for that. There are two surveys that contribute to a jobs report like Friday's. One includes businesses, the kind of people Welch talks with. It showed meager growth, 114,000 sector jobs, in line with an economy that's slogging along.
The other is a survey of households, the kind of people Welch does not talk with, unless they are 20-bedroom households. The good news: This one showed more people looking for work, a good sign, and more people finding work. The bad news: It was mostly part-time work.
Conservatives are right to question the strength of the recovery in the private sector. The jobs generated are barely enough to keep the tepid recovery above water. Jobs are concentrated in low-wage areas like retail and hospitality, or the bottom rungs of health care.
This is part of a bigger, knottier picture: Many economists no longer believe our slow growth and sticky unemployment problem are part of a business cycle. They believe we have major structural problems in our economy - obstacles that will make it tougher to add jobs down the road, and that will keep the number of unemployed and underemployed at 23 million, unacceptably high.
Take start-ups, traditionally the real engine of job growth. Today's start-ups do not want or need as many new employees. In today's highly technological and cloud-based world, entrepreneurs can keep overhead extremely low. There's no brick, no mortar, and often no benefits for the people who do get hired. More employees tend to be independent contractors, and part time. The average number of workers per new business started dropping in 2001, and during that time total start-up employment has dropped from 4.5 million per year to 2.5 million.
Our problems are new, and vexing, and our presidential candidates have offered little creative thinking here. In last week's debates, both candidates had 15 minutes to talk about jobs, and we heard no new ideas - moderator Jim Lehrer wasn't the only one asleep. Old ideas - about tax cuts, training, trade deals - don't match up with our new problems.
Speaking of new problems, there was a strange and inexplicable number in Friday's report. For the first time in recent history, September employment showed a rise for those age 20-24. Traditionally employment in this group declines as students head back to college. No one has explained this number, but one economist offered some theories - these folks are not going back to college because they can't afford to, or are working their way through school to sidestep the kind of debt that has crushed their peers and their parents.
This could be the most hopeful sign in the jobs report - that people aren't waiting for Washington to set sensible policy. They are setting their own.
Source: (c) 2012 Philadelphia Daily News Distributed by Mclatchy-Tribune News Service.