Friday, October 08, 2004

The Employment Situation

by Tom Bozzo

Today's job figures came in, perhaps not surprisingly, below market "expectations" of around 150,000 additional jobs as measured by the Bureau of Labor Statistics' payroll (establishment) survey. Various implications are well-covered here, here, and here.

My small value added is to discuss one excuse for the Bush administration's dismal jobs record I've seen from time to time. The argument goes that since the Clinton-era peak in the employment-population ratio was reached at the height of the stock market "bubble," a portion of the employment was unsustainable and won't come back. (See, e.g., the report on the analysis by consulting/macroeconomic forecasting firm Global Insight in this article.) This argument is disingenuous at best.

It's true that the peak employment-population ratio was reached in April 2000, just after the NASDAQ market peak. However, the period of high employment was not uniquely a feature of the late bubble. The employment-population ratio, currently 62.3 percent, was above 64 percent for 41 out of 42 months, beginning in November, 1997 and ending in April, 2000. At the start of this period, the job market was strong but not obviously unsustainable. A 64% employment-population ratio would increase current employment by 3.8 million jobs.
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