The Recovery Can’t Come Without Job Creation

by Fred Siegmund

Recently, the Wall Street Journal ran a story titled “More Signs Point to Economic Recovery” where it reported that “[an] expansion of manufacturing growth in consumer spending and improved home sales indicated Thursday that the U.S. economy is on the mend.”

While spending is up, the claim that the economy is on the mend ignores that seasonally-adjusted jobs fell again by 263,000 in September. That loss makes the national job total just below 131 million.

November 1999 was the first month that seasonally adjusted establishment employment went above 130 million. Jobs continued to grow and reached a monthly high of 138.2 million in December of 2007.

We’ve Lost 8 Years of Job Growth

In the past 21 months — since December 2007 — the economy has lost 8 years of new jobs. That’s slightly more than 7.2 million jobs down the drain, but the shortfall is bigger because jobs usually grow, not decline.

If the growth trend from 1990 to 2007 continued to now, there would be 140.8 million jobs — nearly 10 million more than they total now.

Population growth suggests jobs would be 140.8 million because population growth in the last 21 months is reported at 3.2 million, while those counted as “Not in the Labor force” are up 3.1 million.

The well publicized decline in manufacturing is one of several trends changing America’s labor markets in ways that make jobs more vulnerable to recessions.

Manufacturing job losses are just over 1.2 million in 21 months, a 9.2 percent drop. In the previous 10 years, manufacturing jobs dropped by 5.5 million.

Which Jobs Replace Manufacturing Losses?

These losses put all the pressure for new jobs, as well as jobs lost in manufacturing and mining, onto services. In the years of transition out of manufacturing, health care has helped with new jobs at growth rates close to double the national average.

The combined increases in jobs for health care are not enough to take up the slack from manufacturing. Instead, growing shares of new jobs from 1990 through the end of 2007 came in non-essential to frivolous services that are readily abandoned in recessions.

The build up of jobs in retail in areas like home stores, furniture, electronics, clothing, sporting goods, pet care services are all part of nearly 870,000 retail jobs lost since December 2007.

Other vulnerable sectors of the economy with a build up of jobs that serve as replacements for manufacturing include hotels, restaurants, gambling, pet care, fitness centers, child care, landscaping, janitorial services, telemarketing, collection agencies, real estate credit, consumer lending, and brokerage services.

We’ve Never Seen Job Losses Like this Before

The 1990s was a period of surge in jobs contracted through employment services and temporary help services. It is no surprise they are off in the recession by more than 13 percent.

There is no precedent for a decline of 7.2 million jobs in 21 months, and the establishment data series goes back to January 1939. Even if jobs start to increase next month, there is no reason to expect them to recover in less than two years.

News of an uptick in consumer spending and housing sales just five days after the latest labor data release gives false hope. Like so many reports on the economy, it concentrates on spending and ignores our eroding job base.

Working Americans probably realize their recovery is still long ways off.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at

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