In an interview on Bloomberg TV Monday, David Stockman explained the Trump phenomenon as a "repudiation" of the failed economic policy that presently dominates Washington.
In the course of the interview, however, one of the Bloomberg commentators returned to well-worn bullet points and claimed "we've created, like, millions of jobs" since the last recession.
Stockman's response was "no we haven't" and he went on to note that "if we look at real jobs, at full time jobs, there are no more today than in December [2007]." Stockman also pointed out that many of those jobs were simply replacing what was lost during the recession. Naturally, Stockman realizes that if you're going to measure progress in jobs growth, you have to measure from the peak of the previous business cycle, and not from the bottom of the most recent trough.
The larger problem, Stockman notes, stems from a complete lack of context when using the "millions of jobs" claim, since job gains in recent years, when compared to past economic cycles, are anemic at best. They also ignore the role of part-time jobs and discouraged workers.
Where They Get Those Jobs Numbers
When politicians and reporters talk about jobs, they're usually talking about the non-farm payroll jobs, which are collected via the so-called "establishment survey" which collects data from employers. The data from this survey tells us about jobs, not employed persons. This means that if a single person has two jobs, that will show up as two jobs. So, if we live in an economy where a large number of people have two jobs in order to make ends meet, we might see jobs increasing while employed persons remain stagnant.
Thus, when one refers to millions of jobs using this survey, we know immediately that this could also include part time positions without benefits, and it does not necessarily mean that millions of people have those jobs.
Nevertheless, if we do look at payroll jobs numbers, we do find that they are increasing. As of February 2016, there were 142 million jobs in the US, which is up 2.5 million jobs from November 2007, which was the peak of the last boom. In other words, since late 2007, when the recession first took hold, the US is up 2.5 million jobs.
It's technically true that this is "millions" of jobs, although by historical standards, it's not much to crow about. If we compare to previous cycles, we find that the current cycle has the lowest job growth rate in nearly 35 years:
Source: Bureau of Labor Statistics, Establishment Survey
Comparing peak to peak, we find that the recoveries of the 1980s and 1990s were far stronger in terms of jobs growth. Those 2.5 million jobs created represent some of the weakest jobs growth we've seen in decades.
And, if we compare growth in jobs to growth in the working age population, we find that in both the last two cycles, population growth among working age Americans has exceeded job growth. This is measured from the the month with peak in total jobs of one cycle to the month with the peak of the following cycle:
Source: Job data from Bureau of Labor Statistics, Establishment Survey; population data from OECD.
We find that not only did the recoveries last longer prior to the most recent two cycles, but they added more jobs. This difference has also become clear in how long it takes the economy to recover the jobs lost in each recession. When we compare past recoveries, we find that the last two recoveries have been weak, with the post-2008 recession being especially weak:
Source: BLS, Establishment Survey
In this case, I've indexed jobs for each recovery period to the previous peak, and plotted according to how many months it took job totals to get back to peak levels.
It's apparently taking longer and longer to get back jobs lost. In the wake of the 1981–1982 recession, we found that it only required 33 months to get back to the previous peak. After the early 90s recession, 36 months were required. Following the dot-com boom, jobs didn't recover for 48 months, and it took the most recent recovery an astounding 78 months to get back to the previous peak.
This isn't the story of a strengthening economy.
If we look at each of the full recovery periods in terms of millions of jobs, we find that from 1981 to 1990 the economy had 18 million more jobs than had existed when jobs last peaked in 1981. By the time the dot-com bust occurred in 2000, the economy had added 22 million more jobs than had existed when jobs peaked back in in 1990. By contrast, from the peak of the dot-com boom in 2000 to the end of the housing boom (in terms of jobs) in 2007, the US added a net of only 6 million jobs. The most recent recovery, so far, has been even worse, with only 2.5 million net jobs gained from 2007 to 2016. It's unknown how much longer the current expansion will last, but job creation will certainly have to accelerate if it's going to compare to earlier expansions.
The Trend in Employed Persons Looks Pretty Much the Same
Is the jobs growth of the most recent recovery the same as the jobs growth of previous recoveries? If we look at the part-time jobs data, and the data for discouraged workers, it appears the answer is no.
In order to analyze this aspect of jobs creation, however, we need to look at the other survey of employment data. The other source for jobs data, known as the "household survey" collects data from workers themselves, and counts employed persons rather than jobs.
In this case, we also find a similar pattern to payroll jobs. Growth has slowed over time:
Source: BLS, Household Survey
After double-digit growth in the 1980s and 1990s, we're left with 2 percent growth since 2007.
The most recent recovery also required the longest period to recover lost jobs, as was the case with the payroll jobs data. (Employed-person totals are indexed to peak level):
Source: BLS, Household Survey
By this measure, 71 months were required to replace the jobs lost after 2007, which was by far the longest recovery period of the past 35 years.
Not All Jobs Are the Same
The final piece of the puzzle comes from a look at whether or not people who want full-time employment are able to find it.
As Stockman maintained in his Bloomberg interview, if we look at the problem of involuntary part-time workers, the employment situation is rather less impressive.
The Bureau of Labor Statistics measures the number of people in the household survey sample who say that they would prefer to work full time, but are not able to find full-time employment.
The number of people who fall into this category has increased significantly in recent years:
Source: BLS, Household Survey, Table A-8
Note that involuntary part-timers are still at elevated levels and well above what they were prior to 2008. These workers total about 6 million, so the next time we hear someone remind us about how much wonderful jobs growth there's been, it's helpful to remember that in recent months, six million people counted as "employed" who are only partially employed.
In fact, if we subtract these partially-employed people from the total employment numbers, there's been very little growth during this most recent recovery (in thousands):
Source: BLS, Household Survey, Table A-8
By this measure, employment, is up a tiny 1.2 million persons. That's compared to 8.1 million new employed persons during the 2001–2007 recovery, and 19.4 million new employed persons during the 1990–2001 recovery.
In other words, involuntary part timers have become a growing part of the labor market and are driving a large portion of the job gains in recent years.
Finally, if we want a another picture of the employment situation, we should add together total unemployed persons, involuntary part-time employees, discouraged workers, and "marginally attached" workers who would like to be employed, and have looked for work (unsuccessfully) some time in the past 12 months.
These are all people who report they would like to be employed, but are all either unable to find work at all, have ceased looking for work because they think none is available, or they have accepted part-time work because they were unable to find full-time work.
Source: BLS, Household Survey, Table A-8
As of February 2016, these people number 16 million persons, but totals have fallen from the peak of 28 million persons reached during 2010.
Moreover, it's this measure that gives us the best idea of the full impact of the lackluster job market on workers, because it gives us a sense of just how many people are in a reduced level of employment.
Indeed, the number of these people remains above what were peak levels during the last recovery, and above what we would have considered to be a "good" level in past cycles. As of February, there are still more people in this situation now than at any other time during the past two decades.
So, has the US economy witnessed "millions" of new jobs being created?
That depends on how you look at the numbers, but any way we slice it, it is clear that jobs growth is much less robust than it's been in previous cycles, and there are increasing numbers of people who are either totally outside the work force or who are only able to find partial employment.
(All data used here is not seasonally adjusted.)
