Why positive job growth is sometimes considered bad news

It is always better to add jobs than lose jobs. True. Compared to 2008-2009, it is a good thing that we have not been losing jobs for the last couple of years.

But because our population of people who need jobs grows every month we have to add a bunch of jobs just to stay in the same place. More people enter the workforce each day than retire.

If we add 10,000 jobs in a month we fall further behind. (The number of unemployed people actually goes up, not down.)

If we add 200,000 jobs in a month that's a decent gain. (The number of unemployed people goes down.)

Here's one good way of looking at the picture:



It is good that we are holding the line at 75%, but to move back upward we need stronger job growth. We are creating just enough jobs to stop the slide, but not enough to recover.

(The employment/population ratio has been around 80% since 1990 which suggests the we need that historically high level to maintain our standard of living. Two-income households are now almost necessary just to get by. Unfortunate, but it is what it is, so in today's world we do need to get higher than 75%. This stat seeks to exclude college and retirement, hence the traditional use of ages 25-54. The ratio may be "better" than it looks because of kids cannot afford to college and older workers cannot afford to retire then there would be more young and old participants than usual, but neither of those things would actually be "better.&quot

This is a very bad employment recession. Easily the worst since WWII. What makes it so bad isn't the raw percentage of unemployed (that was worse in 1981 than in 2009) but the failure to bounce back.



The reason we are not bouncing back is that this recession is about housing prices and balance sheets. It is not like a business cycle recession or a monetary policy recession. Those more common types of recessions have a built-in mechanism for bounce-back.

Summing up, job growth is good, in general, but we need more job growth to have any prospect of recovering.