What GDP growth is required to replace 8 million jobs?

Sorry to keep picking this scab, but there's a sense of communal unreality throughout the political culture of the whole USofA.

If we have lost 7-8 million jobs in the crisis (Since December 2007) then we need 7-8 million jobs just to be where we were back in an already sucky economy. (The Bush economy didn't create any jobs even before the crisis so I am not talking about a return to some employment nirvana.)


Questions for anyone in power:

What levels of GDP growth and in what time-frames create 7-8 million jobs?

What GDP growth are we expecting?

Is what we are doing correct?


Discuss.

of much less quality.

Here's a good article which discusses why GDP numbers are practically useless: http://www.marketoracle.co.uk/index.php?name=News&file=article&sid=5685

I recognize that our measuremnts understate the case but I would be happy to hear someone in power address the questions even in terms of our most conventional economic assumptions and measures. (GDP, Labor Dept Employment statistics, etc.)

If the situation is a massive fail even using our friendliest metrics...

I'm not having much faith in how the instructions play out as is. I don't know why it surprises the citizenry that we make so much war, weapons are about the only thing we manufacture any more.

Reboot, with more avid anti-viral umph.

Great questions get kicks!

Let them answer the questions in conventional terms, then we can examine the limitations of the lexicon.

My reliance on GDP and conventional unemployment % is that those are measures with a lot of history, whatever their inadequacies.

Is it:

GDP --> jobs

or is it:

jobs --> GDP?



I'm actually thinking that it's jobs --> GDP, and I think it matters, because if that's true, then really goal #1 is job creation, and we would know it's working if GDP goes up.

Well, one sense in which you are correct is that it is probably possible to create jobless GDP but impossible to create GDPless jobs.

But since the logic of everything we have done is predicated on GDP---->Jobs I think that's the correct form for questioning policy choices, whichever way the real-world causality runs.

The problem is that if we turn the question around it becomes weird... If I could ask the president one question at a press conference or town-hall I wouldn't want to waste my question with: "What level of job creation does it take to create 7-8 million jobs?"

But I take your point.

"Nonfarm business sector labor productivity increased at a 6.2 percent annual rate during the fourth quarter of 2009, the U.S. Bureau of Labor Statistics reported today. This gain in productivity reflects increases of 7.2 percent in output and 1.0 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) This was the first quarterly increase in hours worked since the second quarter of 2007 (0.9 percent).

Productivity increased 5.1 percent over the last four quarters—more than during any similar period since output per hour rose 6.1 percent from the first quarter of 2001 to the first quarter of 2002 (chart 1, table A). Labor productivity is calculated by dividing an index of real output by an index of the combined hours worked of all persons, including employees, proprietors, and unpaid family workers."

1. IMHO, Productivity is up cuz one person is doing the job of three.
2. Jobs have been outsourced and those jobs are NOT coming back.

And those last three words..."UNPAID FAMILY WORKERS." WTF is that???? Just more FEMALE LABOR not valued in this crap society?

If we would do what Germany has done regarding SOLAR ENERGY, there would be jobs. But the Oil Boyz, Utility Boyz, Coal Boyz ain't gonna allow it.

Want more jobs???? Stop all of this damn VOLUNTEER work for the hungry, needy, elderly, disabled and PAY A DECENT WAGE FOR HELPING THOSE IN NEED. These jobs are the most important of our crap culture and TPTB demand they be done for FREE!!!

Here's some more jobs....ever live in these crappy apartment complexes in this crappy culture? THERE IS NO INSULATION. All the heat and all the A/C just goes out the walls and through the roof. Make the owners/builders FIX THAT. We're wasting more energy from these crappy vinyl-sided POS apartment buildings than probably the entire country of Cost Rica uses in a year!!!

Here's an idea from FDR's days: Handed out shovels and people shoveled snow off sidewalks for income. Now if you really wanted to create jobs, GIVE THEM SPOONS INSTEAD. LOL...I'm kidding. Old joke.

More jobs: Legalize Industrial Hemp. Old PTB Boyz won't have that....would end chemical/plastics/oil companies.

More jobs: build OFF THE GRID small homes.

OK...rant done. I'm so sick of our crappy culture. Just finished reading 'Empire of Illusions'....Highly recommend. WASF. Here's a stat for you....42% of college grads never read another book after graduating!

Or at least that's what I've been told.

that certain folks instinctively know there is no "good" answer to and just want to sweep such thoughts aay.

My guess is something like 5% for at least 6 quarters but I haven't had any coffee yet (it's brewing) and feel that is optimistic both because such sustained growth is very unlikely and in terms of quantity of quarters to get there.

Of course as indicated in the OP, making up the ground lost in the past couple of years will still leave us on a quickly sinking ship but at least we all could help to bail the water.

I'm pretty certain that ten year old Republican ideas, nibbling around the edges, and supply side economics won't be providing a ladder out of this deep pit.

IIRC he plugged in 7% every quarter for several years.

It helped, but not nearly as much as we would expect... got it down to something like 7.5% unemployment.

It seems that organic job creation requires an incredible amount of growth. (Or at least is correlated with an incredible amount of growth.)

Now, if you turn it around and the government did direct hiring to reach a certain level of unemployment by fiat I don't know what effect that would have.

My sense is that indirect job creation via stimulated growth is so inefficient that we cannot do a thing without massive spending.

But actually just hiring people to hold down chairs (so they don't fly into space) would be surprisingly inexpensive. Would that in turn prove highly stimulative? Maybe. I don't know.

But there's no way that America will tolerate big make-work hiring even if it was the most fiscally responsible method of general stimulus.

But actually just hiring people to hold down chairs (so they don't fly into space) would be surprisingly inexpensive. Would that in turn prove highly stimulative? Maybe. I don't know.

The theory at least is that it's very stimulative. So stimulative, in fact, that it runs a high risk of inflation because it's adding to the nominal GDP without adding to the actual produced value of goods and services.

I don't know how sincere that belief really is, since we did the exact same thing in the form of TARP, only to banks rather than people.

We have to have some form of game changer then to even treadwater, like some new explosive technology.

I continue to advocate direct hiring and putting those people to work on next generation infrastructure and stringing highspeed EVERYWHERE and hoping for the best.

What got me on this kick was reviewing GDP growth figures from other downturns.

Once I realized that GDP was over 8% for all of 1983 I got just how screwed we are... we had 6 ginormous quarters straight coming out of that recession. Since GDP growth is a relative measure then of course we'd expect huge numbers coming out of a decline... it makes sense.

But the new budget projects "almost" 3% in 2010. (And no long-term predictions of above-trend growth)

No bounce... no repair phase. Just the new normal.

I think this is what a bubble-collapse recession is supposed to look like. There is no reason for housing to rebound. The whole point is that the values were delusional, not merely the peak of a cyclical up-and-down.

The problem seems too big for our political system to contemplate.

Maybe we should just let it be... the jobs aren't coming back, the money isn't coming back... but that's not my nature. I always want to think about solutions.

Advancements in technology allows corporations to produce and sell goods with less and less people. This makes the GDP grow, and it can also mean stagnant job growth.

In addition, outsourcing overseas can also make GDP grow with creating jobs. For example, if Home Depot want to replenish its inventory, they can do so by ordering hammers, screwdrivers, nails etc. from China. The order will make GDP look bigger, but the jobs impact will be felt in China.

What the U.S. needs to do is fund, either directly or indirectly, major new technological infrastructure projects that will employ people directly and teach them new job skills. A new continental High Speed Rail system could create thousands of new jobs across the country AND lead to new business opportunities because of the advancement in transportation.

However, we live in a politically immature nation. One that doesn't blink twice about invading and occupying a nation that never attacked us, but will raise hell when the government even attempts a modest regulation of a disastrious health care system.

Repeat this to yourself, over and over, until you shake off the lie the corporate media has spun for 30 years now.

Growth does not create jobs.

Worse yet, a lot of what gets reported as "growth" is actually job losses.

I believe that complicates matters.

I also want to add another thought-

If the jobs aren't created, then is the only real solution to raise taxes?


But maybe I'm even more ignorant than I think, since even WITH war, the Bush economy was a disaster. Which has left me wondering if either war isn't as profitable, or we were actually in worse condition than it seemed.


By the way, I see war as a tax. It spreads wealth without creating a product that adds to society.

As almost everyone has pointed out, we can and have had jobless GDP.

The reason the OP is structured the way it is is not to make an economic claim, but to question policy within the assumptions that have informed policy.

There is a correlation of GDP and employment growth/shrinkage, leaving causation aside. And though there can be jobless GDP there has never been a sustained GDP decline without job losses.

Since our general policy theory is that economic growth (as measured) creates jobs I think the form of the question is appropriate.

"If the assumption is that growth will lead to jobs then how much growth do you think we need, and how much do you expect us to actually get?"

For purposes of the OP think correlation, not causation. There are economic rules of thumb of the correlation of growth and employment. If our leaders have dispensed with those broad assumptions then that would be a big story in itself.

But as far as I know they haven't.

Maybe levees are not the best way to protect New Orleans, but if the government says they are and then starts building two-foot levees to retain eight-foot water it would be reasonable to ask pointed questions about levee height without getting into whether up-river spill-ways or something were a better approach.

If the government said, "We are going to stop general stimulus and instead will directly hire millions of people to write book reports" that would be a different approach that would prompt different questions.