Despite Headlines, 142 Million Still at Work

Today’s headline: Economy Shed 598,000 Jobs in January

President Tokyo Rose using the data as justification to feed his pet pig spending bill: “And if we drag our feet and fail to act, this crisis will turn into a catastrophe.”

Remember the rule of thumb about numbers in headlines. They want you to panic, so absolute numbers should be examined in percentage terms to increase genuine understanding. To get a percentage we need to determine how many are at work.

It’s a hair over 142,000,000. 600K divided by 142M yields an employment drop of .4%. Yup, four tenths of one percent. Not so alarming in those terms, eh?

This leads me to a bonus question: How does total employment compare to other times? Are there fewer people at work, confirming the sense of economic gloom?

Nope. A million more people were at work in this time of alleged crisis than during the bubble peak.

Focusing on non-farm payrolls, which includes nearly all workers (and because the figures were handy), we see that in January 2009 there were 138,580,000 people employed. In 2007, before any bubbles burst, the figure was 137,598,000.

2009 = 138.5m (current “crisis”)
2007 = 137.6m (peak of real estate bubble)
2003 = 129.9m (post 9/11 low)
2000 = 131.8m (end of dotcom bubble)
1993 = 110.8M (Clinton’s first full year)
1988 = 105.3m (End of Reagan’s term)
1980 =  90.5m (End of Carter’s term)

The United States persistently puts more and more people to work. No matter the President or the vagaries of the business cycle, our socio-capitalist system has created work and wealth for decades and centuries.

The current situation merits attention, but not panic. When I can, I hope to decompose the figures on job losses. I have preliminary evidence that labor productivity is going up, which means we’re losing some “dead wood” in the economy. Which is not pleasant if you’re one being cut down, I recognize. But jobs must add value if we want to keep our total employment on this persistent upward trend.