Has Structural Change Contributed to a Jobless Recovery?
newyorkfed.org
The Role of Structural Change
Recessions mix cyclical and structural adjustments. Cyclical adjustments are reversible responses to lulls in demand, while structural adjustments transform a firm or industry by relocating workers and capital. The job losses associated with cyclical shocks are temporary: at the end of the recession, industries rebound and laid-off workers are recalled to their old firms or readily find comparable employment with another firm. Job losses that stem from structural changes, however, are permanent: as industries decline, jobs are eliminated, compelling workers to switch industries, sectors, locations, or skills in order to find a new job.
A preponderance of structural—as opposed to cyclical—adjustments during the most recent recession would help to explain why employment has languished during the re-covery. If job growth now depends on the creation of new positions in different firms and industries, then we would expect a long lag before employment rebounded. Employers incur risks in creating new jobs, and require additional time to establish and fill positions.
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Published September 6, 2003
By News-Leader Wire Services
93,000 lost jobs cast doubt on recovery
Companies aren't hiring, which increases risk.
news-leader.com
Most troubling, some economists said, is how a growing economy still has failed to produce new jobs.
"This is unchartered waters," said Bernard Weinstein, director of the Center for Economic Development and Research at the University of North Texas. "We've never had a recovery go this long without an improvement in the job market."
Since the recession's end, payrolls have fallen by 1.1 million positions, making this the worst recovery in terms of employment growth since the Bureau of Labor Statistics began tracking monthly data in 1939, according to the Economic Policy Institute in Washington.
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By William L. Watts, CBS.MarketWatch.comLast Update: 6:27 AM ET Sept. 6, 2003
Tax cuts haven't added jobs
Bush counting on growth as labor market lags
cbs.marketwatch.com
WASHINGTON (CBS.MW) -- When it comes to the economy and his re-election hopes, President Bush may have little choice but to hope that time is on his side.
Job losses in the 29 months since the end of the recession, however, translate into a 2.9 percent contraction of the labor force, according to the Economic Policy Institute, a think tank funded by foundations and labor unions. That exceeds the 0.7 percent contraction seen in the same period following the end of the 1990-92 recession, the only other such postwar "jobless recovery."
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Published on Saturday, September 6, 2003 by the Washington Post
by Mike Allen and Jonathan Weisman
More Than 2.7 Million Jobs Lost During Bush's PresidencyTax Cut Claims Gain Criticism As Employers Shed More Jobs
commondreams.org
Before the latest tax cut plan passed, White House economists had predicted it would add 1.4 million new jobs through 2004, on top of 4.1 million jobs that a growing economy would have generated anyway, a rate of 344,000 jobs created a month. By its own accounting, the Bush administration fell 437,000 jobs short of its own projections in August, a shortfall not lost on the president's critics.
Economists at Goldman Sachs dubbed this go-round the "job-loss recovery." The economy has grown each quarter at rates of between 1.3 and 5 percent since the recession officially ended in November 2001, but payrolls have fallen, by an average of 0.4 percent every three months, the New York Fed found.
That is not what Bush anticipated when he was stumping for his third tax cut in as many years. Not only did the president frame the tax cut as a jobs program, but also his Council of Economic Advisers left a paper trail. The council predicted that passage of the tax cut would produce 510,000 new jobs in 2003 and 891,000 in 2004.
Since the tax cut was signed in late May, employers have shed 225,000 jobs.
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Defying Forecast, Job Losses Mount for a 22nd Month
nytimes.com
By LOUIS UCHITELLE
At no time since the start of the most recent recession, in March 2001, have there been so many signals that the economy is finally beginning to grow strongly enough to create jobs. Many forecasters had thought the turnaround would come in July, and certainly in August. Instead, the 93,000 lost jobs — nearly half of them in manufacturing — was the largest decline in four months, and well above the 44,000 lost in July.
"If we don't see some job growth by Thanksgiving, then the spurt in economic activity that we are currently experiencing will fade," said Mark M. Zandi, chief economist at Economy.com, "and we will be right back to where we were early this year, in the economic soup.
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CANADA
Jobless rate rises to eight per cent in August, highest level in 20 months
9/5/2003 6:31:31 PM
cbs.marketwatch.com;
Analysts weren't expecting the weakness shown in the employment report that included an overall drop of 19,000 positions in August - the fourth monthly decline in the last five months. The jump in the jobless rate was a surprise, "but not hugely so," Finance Minister John Manley said from Thailand where he's attending an APEC conference. "I'm not at this point overly concerned."
The data also showed about 46,000 full-time positions in the private-sector were cut in August - the largest one-month loss since 1995.
That was only partially offset by a rise in self-employment and in public-sector jobs.
"There is no silver lining at all in these numbers," said Marc Levesque, senior economist with TD Bank Group.
"The numbers were unambiguously weak."
That was based on the central bank's upbeat view that it sees no threat from inflation and that the economy will soon strengthen, lifted by an anticipated recovery in the United States.
Overall employment has grown by only 0.3 per cent to date this year, a sharp contrast with the 2.6 per cent growth rate in jobs during the same period in 2002, Statistics Canada said. |
