Where Did the Jobs Go?

From our latest at the Huffington Post:

We need to do something we just aren’t good at: having a serious debate on how to tackle a near-term problem while also looking at what to do for the future. As the candidates for president and Congress begin offering up their ideas on “jobs,” voters need to consider whether their proposals are aimed at creating jobs quickly or whether they’re aimed at strengthening the job picture over the long haul, say the next decade or two.

The truth is the country really needs both, but we can’t expect short-term cures to fix long-term problems (like job losses due to globalization or technology), and we can’t expect long-term solutions to kick in quickly. You probably won’t hear any subtleties like this on the campaign trail. Generally speaking, politicians are in the confusion business, so drawing these kinds of distinctions isn’t their strong suit. Here’s a quick tour of some of the jobs ideas out there and their short-term and long-term implications.

Our latest Huffington Post piece points out that an episode of Friends is actually prescient about a problem facing young people in the workforce: it’s getting harder to get ahead on jobs and wages, and has been for some time. Still, some bets are better than others, and education does pay off in higher wages and lower unemployment rates, as this Bureau of Labor Statistics chart shows:

The new jobs report brings hope that that the economy is finally on a hot streak. But if you’re wondering why so many economists and analysts are reluctant to declare victory, have a look at this chart from the Economix blog showing how long it took in previous recessions to make up the jobs that were lost. So far we’re only made back one-third of the jobs lost during the Great Recession.

Things are indeed getting better. The problem is that the hole we’ve fallen into is so very, very deep. 

Today the Bureau of Labor Statistics will release the latest monthly jobs report. With luck, it’ll be fairly optimistic. But before the bloviating gets too far out of hand, you might want to get some perspective. The Federal Reserve Bank of Atlantic has come up with a “jobs calculator” that lets you figure out how long it’ll take, and how many jobs have to be created, to hit any specific target for unemployment.

For example, the current unemployment rate is 8.3 percent. If you wanted to cut that down to 6 percent in 12 months, the calculator will tell you what it takes: payroll employment would have to grow by 363,813 jobs per month. In January, payroll employment rose by 243,000 — and the calculator helps put that in context. Because there are plenty of people who’ll want you to think the jobs situation is either better or worse than it really is.

(A hat tip to @AnnieLowrey on this one).

Over the last half-century, the United States (along with the rest of the Western world) moved to a service economy. And services are usually provided where the people are, as you can see in this chart of projected growth in service jobs by geography.

There’s at least one plus here, which is that the majority of service jobs aren’t going overseas. Most, but certainly not all, require face-to-face contact. But as Richard Florida noted in The Atlantic, where this chart appeared, whether or not these are the kinds of jobs that can support a middle-class life is another question.

One of the more disturbing aspects of the jobs crisis is what it does to young people just entering the job market. Studies show that people who first enter the job market during a recession often never catch up economically.

As the Real Time Economics blog puts it:

For young people trying to find work — both men and women — the scars of their early-career unemployment could last a lifetime. Mr. James notes that the early years of a career are meant to be a critical period for developing new skills, advancing up the job ladder and boosting earnings. On average, Mr. James says, two-thirds of lifetime wage growth come in the first 10 years of a person’s career. Millions of unemployed young people are missing out on those opportunities.

(Library of Congress photo)

Once, there was an iceman working nearly every street in every town in America, including one of our grandfathers. The disappearance of the iceman and the rise of the refrigerator says a lot about how technology affects jobs — and points out what the presidential candidates are desperately avoiding when they talk about the economy.

My grandfather was an example of the “creative destruction” of jobs that economists (and lately presidential candidates) embrace. Technology both creates and destroys jobs, usually at the same time, and ideally because a superior product came along. Refrigerators were better than iceboxes. Eventually even my grandfather admitted it. If you look at the overall economy, the loss of ice routes was more than made up by new jobs making refrigerators.

The key word in creative destruction, however, is “creative.” Now we’re living in another time not unlike the 1930s, with a jobs crisis that’s partly a massive failure of financial markets and partly a huge technological shift in the nature of work. There’s no question the Great Recession slammed the global economy. But one reason why the jobs market has been so slow to recover is that technology is enabling us to do more work with fewer people — or with people anywhere around the world.

Check out the full blog, “The Iceman Goeth: Politicians Ignore the Biggest Threat to American Jobs,” at the Huffington Post.

From our 12 Myths about the Jobs Crisis slideshow:

Most Americans are deeply unhappy with our tax system, and it is true that job creation can stall when taxes are too high. But after the Bush tax cuts in 2001 and 2003, U.S. federal income taxes are already at historically low levels. Yet between 2000 and 2010, our economy lost about as many jobs as we created. Taxes matter, and tax reform and specific kinds of tax cuts might well be helpful, but just cutting taxes, in and of itself, is not a foolproof recipe for job creation.

We’re not going to rev up our economy’s job creation capacity in just a few years. Anyone who says otherwise is selling something - usually themselves.

Feel like politicians are talking past the jobs problem, rather than about it? So do we.

In our latest Huffington Post blog, Election Year Follies: The Disingenuous Jobs Debate, we offer a five-point plan for a more sensible, reality based debate on the central issue of this election.

What we’re suggesting here is just a nudge in a better, more honest direction. The United States faces a long and difficult transition on jobs. Rhetoric, no matter how compelling, just won’t get us there.