Part II:
The Book of Jobs
Employment is a campaign issue, but what do the surveys really tell us about the jobs market?
by Irwin M. Stelzer
01/22/2004 12:00:00 AM
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Clear? Surely clear enough for the president's men to be able to rebut the charge that he has presided over the most massive reduction in jobs since Herbert Hoover presided over the Great Depression. But they just can't. Instead, they act as if the reports of massive job losses are true, and adopt a loose fiscal policy appropriate in periods of high unemployment.
WHICH IS WHY the American economy may be heading for a bit of turbulence later this year. The red ink flows, and reports that Bush will stanch the flow in his next budget by persuading Congress to control spending should be accorded all the weight we generally ascribe to campaign rhetoric.
Meanwhile, Greenspan has done everything but give his word not to raise interest rates this year, prompting economists at Goldman Sachs to conclude, "We believe that the monetary authorities will be patient and will not tighten monetary policy in 2004."
If red ink and low interest rates are not enough to encourage the inflation genie's thoughts of escape from his bottle, it can find added cheer from the currency and oil markets. The shrinking dollar will eventually make imports more expensive, giving domestic manufacturers a bit of room to raise prices, and the OPEC oil cartel will do its bit by curtailing production so as to keep crude oil prices above the $28 per barrel ceiling it once promised to honor.
Meanwhile, the number of jobs will continue to increase. But not in the usual way. In the past, workers have
been laid off when business was slow, and rehired--usually by the same employer--when things picked up. That's what the classic business cycle was all about. A new study by Erica Groshen and Simon Potter at the Federal Reserve Bank of New York concludes that we are now witnessing structural, rather than cyclical, shifts in the job market. Most of the industries that have lost jobs are not likely to regain them; new jobs are coming from entirely different industries. This puts pressure on workers to relocate and retrain, rather than simply wait for business to return in their old industries.
That can be a painful process. But it apparently is not so widespread as to dampen Americans' spirits. Ninety-five percent of Americans tell Gallup pollsters that they are "very happy" or "fairly happy," prompting the polling organization to conclude, "Americans' subjective sense of well being is as high today as at any time in the history of these Gallup trends." Which may be the final proof that the household survey is a better indicator of what is going on in the jobs market than is the employment survey.
Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard. |
