Economy: The hole in US employment

By Colin Twiggs
February 11th, 2014 10:30 p.m. ET (2:30 p:m AEDT)

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US employment is topical after two months of poor jobs figures. Employers added 113,000 new jobs, against an expected 185,000, last month and a low 75,000 in December. Rather than focus on monthly data, let's take a long-term view.

The number of full-time employed as a percentage of total population [red line below] fell dramatically during the GFC, with about 1 in 10 employees losing their jobs. Since then, roughly 1 out of 4 full-time jobs lost has been restored, while the other 3 are still missing (population growth fell from 1.0% to around 0.7% post-GFC, limiting the distortion).

Employed Normally Full-time as Percentage of Population

Comparing employment levels to the 1980s is little consolation because this is skewed by the rising participation rate of women in the work-force. The pink line below shows how the number of women employed grew from under 14% of total population in the late 1960s to more than 22% prior to the GFC. The effect on total employment [green line] was dramatic, while employment of men [blue line] oscillated between 24% and 26%.

US Men & Women Employment Levels as Percentage of Population

Part-time employment — the difference between total employment [green] and full-time employed [red] below — has leveled off since 2000 at roughly 6% of the total population. So loss of full-time positions has not been compensated by a rise in casual work. Both have been affected.

US Full-time and Total Employment as Percentage of Population

The "good news" is that a soft labor market will lead to low wages growth for a considerable period, boosting corporate profits.

The bad news is that low employment levels will depress sales growth [green line]....

Total US Business Sales Percentage Growth and over GDP

And discourage new investment.....

Private NonResidential Fixed Investment

Which would harm GDP growth.

Whether the succeeding generation is to be more virtuous than their predecessors, I cannot say ; but I am sure they will have more worldly wisdom, and enough, I hope, to know that honesty is the first chapter in the book of wisdom.

~ Thomas Jefferson: Letter to Nathaniel Macon January 12th, 1819.