A few interesting pointers about job creation and destruction from an article in the Businessweek.
One percentage point of productivity growth can eliminate up to 1.3 million jobs a year.
Of the 2.7 million jobs lost over the past three years, only 300,000 have been from outsourcing, according to Forrester Research Inc. People rightly fear that jobs in high tech and services will disappear just as manufacturing jobs did. Perhaps so.
In short, productivity is generating wealth, not employment. Corporate profits as a share of national income are at an all-time high. So is net worth for many individuals. Consumer net worth hit a new peak, at $45 trillion -- up 75% since 1995 -- and consumers have more than recouped their losses from the bust.
There's no question that today's jobless recovery is causing many people real pain. The number of discouraged workers leaving the workforce is unprecedented. Labor-force participation is down among precisely the most vulnerable parts of the workforce -- younger and nonwhite workers. Some are going back to school, but many are simply giving up after fruitless searches for decent jobs. If the participation rate were at its March, 2001, level, there would be 2.7 million more workers in the labor force looking for jobs. This would push the unemployment rate up to 7.4%, not the current 5.6%.
History has shown time and again that jobs follow growth, but not necessarily in a simple, linear fashion. America has a dynamic, fast-changing economy that embodies Joseph A. Schumpeter's ideal of creative destruction. We are now experiencing the maximum pain from the wreckage of outmoded jobs while still awaiting the innovations that will generate the work of the future. While America's faith in its innovation economy has often been tested, it has never been betrayed. Given the chance, the economy will deliver the jobs and prosperity that it has in the past.
Zachary Latif 07:26 |
