By Jon Hilsenrath
To mark this week’s focus on the dismal state of the U.S. job market, check out the following chart, which shows the trajectory of private sector U.S. employment since 1998. It tells a story of a lost decade for U.S. workers.
The U.S. now produces fewer private sector jobs than it did a decade ago. This been the case since August, and it’s getting worse. In October, private sector companies employed 108.401 million U.S. workers, a million fewer than in October 1999, when they employed 109.487 million. Not since the Labor Department began tracking payroll employment in 1939 has there been such a stretch with no net job gains.
The problem resonates with President Barack Obama, who is holding a jobs summit on Thursday with executives, economists and union leaders, and with the Labor Department getting ready to tee up its November jobs report on Friday.
With the economy recovering from last year’s shock, private sector firms might start hiring again. But it likely will take months if not years to make up this gap.
How to explain the gap? One obvious answer is that the U.S. has suffered through two recessions during this stretch. The first, in 2001, was short and mild but included more than two years of job cuts. The second one starting in 2007 has been long and brutal. The other answer is that the U.S. has enjoyed a big burst of productivity growth during this stretch — which means firms are producing more with fewer workers. In the long-run this is supposed to be a good development because it leads to profit and income gains. But the short-term costs are looking increasingly more debilitating.
It’s worth nothing that overall employment is higher than it was a decade ago, but that’s only because the government has produced two million additional jobs during that stretch. You can expect both sides of Washington’s political spectrum to spin the lost decade for jobs in their own direction. Republicans will use it to blast Mr. Obama’s big government approach — though it’s worth remembering that most of these jobs were lost when a Republican controlled the White House. Democrats will use the data to demonstrate the benefits of a helping government hand in down economic times. The labor market would indeed be worse if it weren’t for those two million extra government jobs. But this hardly seems like the path to prosperity.