Network News

X My Profile
View More Activity

What will 2.95 million jobs get you?

Thumbnail image for jobchart610.jpg

Neil Irwin:

It takes 120,000 new jobs a month, and maybe more, to keep the unemployment rate unchanged.

So what would it take to get the unemployment rate to come down at a rate of, say, 1 percentage point a year? There were about 155 million people in the American labor force in June, so about 1.5 million jobs would need to be created over and above the labor force growth number to bring the jobless rate down by 1 full percent. On a monthly basis, that would be 125,000 jobs.

Add 120,000 and 125,000, and you have the depressing answer: We need employers to create about 245,000 net new jobs each month to bring the unemployment rate down 1 percentage point a year.

To answer the question in the headline, creating 2.95 million jobs in a year will get you a one-percentage-point decrease in the unemployment rate.

By Ezra Klein  |  July 16, 2010; 3:24 PM ET
Categories:  Economy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: (Late) Lunch Break
Next: The incredible obviousness of the Democrats' political fortunes

Comments

How is the labor force growth number dependent on baby boomers' retirement? Isn't immigration slower right now than normal?

Posted by: mschol17 | July 16, 2010 3:57 PM | Report abuse

well if that's true, then I think the obvious next question is: were the overly optimistic stimulus/unemployment forecasts from Romer and Bernstein not just wrong, but fatally flawed from the outset? I mean, Bernstein acknowledges that the forecast was done without Q4 numbers, which turned out to be terrible. But did they simply miscalculate the number of jobs, above break even, that were going to be necessary? I mean, both of their unemployment graphs, with and without stimulus, begin to turn down fairly quickly:

http://krugman.blogs.nytimes.com/2009/01/10/romer-and-bernstein-on-stimulus/

With the stimulus, they predicted a one-percent drop within about 14 months. Could the initial conditions then have EVER supported that?

Even *without* the stimulus, they predicted a drop from 9 to 8% within about 18 months. Could that EVER have happened, given your numbers here?

And for good measure, has this Bernstain remark, from June 2009, panned out?
http://mediamatters.org/research/200906090019

"What I will say, though, and I don't want to lose sight of this, is that the American Recovery and Reinvestment Act, in our view, according to our analysis, will lead to an unemployment rate by the end of next year of 1.5 to 2 points lower than would otherwise be the case. And that is the direct result of the kinds of programs and projects we're talking about today, putting literally millions of people back to work who in the absence of this program would not be getting fully employed."

Posted by: andrewlong | July 16, 2010 3:58 PM | Report abuse

"But did they simply miscalculate the number of jobs, above break even, that were going to be necessary? I mean, both of their unemployment graphs, with and without stimulus, begin to turn down fairly quickly.

With the stimulus, they predicted a one-percent drop within about 14 months. Could the initial conditions then have EVER supported that?"

Unemployment peaked last October (fairly close to the Romer projected peak); 9 months later it has fallen 0.6%. I wouldn't be surprised if we reach a one-percent drop this month or next, ahead of the projected schedule.

Really, if you remove the 99-week benefit extension bias from the unemployment numbers Romer's with-stimulus projection nails everything we've seen dead on.

Posted by: eggnogfool | July 16, 2010 10:56 PM | Report abuse

Adding to that, the chart in his post shows that

(A) we've added ~800,000 jobs since October
(B) the unemployment rate has fallen 0.6%.

The figure directly contradicts the text of the post; if you need 125,000 jobs/month to break even, then over the past 8 months the 'break even job growth' would have been 1,000,000 jobs. The text says the unemployment rate should have increased about 0.1%; reality showed otherwise.

Reality > the text. The labor force is shrinking; even a slight positive job growth can shrink the unemployment rate rapidly under these conditions. And we've been a bit better than that.

Posted by: eggnogfool | July 16, 2010 11:13 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company