Confidence Must Be Restored to Improve Job Market
January 31, 2011
Although the unemployment rate fell to 9.4 percent in December from 9.8 percent in November, some 14.5 million people are still classified as unemployed by the Bureau of Labor Statistics. Even if the recovery continues along its current track, some six more years will be needed to bring the job total back to where it was November 2007, when some 146.6 million people were employed in the United States, says Robert Higgs, senior fellow in political economy with the Independent Institute.
- Employment began to fall after reaching its peak in November 2007, reaching its low point in December 2009, when only 138 million people had jobs.
- In the year since, employment has risen by only 1.25 million, or less than 1 percent.
Meanwhile, millions of people have withdrawn from the labor market during the past three years.
- Of the people not in the labor force, an estimated 4.7 million would seek work if they believed they might find a job.
- If these individuals were considered unemployed, along with those actively seeking work, the official unemployment rate would be more than 12 percent today.
Data on the division of employment between government and the private sector tell an even sadder story, says Higgs.
- Between November 2007 and December 2009, some 8.5 million private-sector jobs disappeared in nonagricultural industries.
- By December 2010, only 1.8 million of those lost jobs had been regained, leaving a net loss of 6.7 million jobs.
- In stark contrast, government employment during the same period hardly changed.
With private-sector jobs greatly diminished and government jobs relatively steady, at least for the time being, the ratio of private-sector workers to bureaucrats has moved in an unfavorable direction. The government's biggest challenge today is to restore lost confidence, says Higgs.
Source: Robert Higgs, "Uncertainty Continues to Depress Jobs," Investor's Business Daily, January 25, 2011.
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