Monday, August 31, 2009

Job Destruction isn't the Problem

Andy Harless (hat tip Credit Writedowns) with details of the latest BLS Employment Dynamics Summary:

Overall (at least during the first four quarters of the recession, up through the end of 2008, for which we have the relevant data), there weren’t an unusually large number of total jobs being destroyed.

But...but...but...haven’t we been hearing about large numbers of job losses month after month since the recession began? Sort of. We’ve been hearing about large numbers of net job losses. That is, the number of jobs that have been lost has been a lot more than the number that have been created. And a lot of job losers have ended up collecting unemployment insurance for a long time, sending the figures for continuing claims up to records, instead of getting new jobs. But the gross number of jobs being destroyed has not been unusually large. In fact, relative to the overall level of employment, job destruction was happening at a faster rate during the boom of the late 1990s than it was during the last quarter of 2008.
As can be seen below, job contraction and closings are both at levels seen throughout the 1990's, but openings and expansion are both substantially below levels of that same time period.

Back to Andy with the tidy conclusion:
If you lost a job in 1999, you weren’t actually all that atypical, but it wasn’t a big problem, because typically, you could find a new job fairly easily. If you lost a job in 2008, you were (typically) out of luck.
Source: BLS


  1. Just have to ask: How does the BLS' notorious job "birth/death model" figure in these calculations???

  2. I was thinking the same thing. The BLS states as an input into the birth / death:

    The historical time series used to create and test the ARIMA model was derived from the UI universe micro level database, and reflects the actual residual net of births and deaths over the past five years.

    So, I'm going to say they have overstated (shocker) new business employment.

  3. the birth death model is an absolute joke

  4. The point I get from the pic is that new job creation has been falling for a long time.

    Raising taxes next year will really help that problem. ;)