The Lost Decade

This really is a scary set of charts from Michael Mandel. The one atop this post is the biggie, but a bit confusing: The X axis runs from 1949 to 2009. But the percentile for 1949, for instance, is not how much job growth was seen in 1949. It's how much job growth was seen between 1939 and 1949. And so when you see that line plummet in May of 2009, you're not seeing simply slow growth in May of 2009. You're seeing total job growth between May of 1999 and May of 2009. The change over that decade? 1.1 percent.

And as Mandel explains, that actually overstates our job growth. The public sector produced more than twice as many jobs as the private sector did during that period: 2.4 million to 1.1 million. And the biggest driver in the private sector was health care -- much of which is paid for by Medicare and Medicaid. So it's public sector jobs and jobs created by public sector demand.

Mandel calls this "the lost decade for jobs," and he's right. I'd make one additional point, though: When people defend the growth of the financial sector, they say its great contribution has been more efficiently getting money to vibrant businesses and dynamic institutions that can generate job growth and GDP expansion. That doesn't seem to have worked out so well. Rather, it seems that the credit bubble gave us enough free money that we were distracted from anemic job and wage growth because we could maintain rising consumption. Now that's over.