Friday, May 18, 2012
SBE Council Chief Economist: U.S. Should Have At Least Wiped Out Job Losses from Great Recession
Today, Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), noted that by this point in our economic recovery, the U.S. should have at least wiped out the nearly 9 million job losses during the Great Recession, rather than still being down by 4.7 million jobs.
"According to the government's household survey, from November 2007 to December 2009, U.S. employment fell by a staggering 8.9 million. Over the subsequent 28 months, job losses have only been cut to 4.7 million.
"From the recent bottom on jobs in December 2009 to April 2012, the U.S. added 4.2 million jobs, or an increase of 3 percent. That might sound pretty good, but when you compare it to where we could and should be, it's pathetic.
"Consider the previous big economic downturn in the early 1980s, and what happened subsequently. After employment hit bottom in December 1982 to April 1985, the U.S. added 7.9 million jobs, or an increase of 8 percent. That is, over the same number of months, the U.S. added 7.9 million jobs in the early eighties, while we have added only 4.2 million recently. At the very least, we should be a million jobs short of wiping out the job losses from the Great Recession, rather than being 4.7 million short.
"But considering that our economy and the number of employed are larger today, if we had produced jobs at the same rate over the past 28 months as we did during those 28 months in the eighties, we would have added 11 million jobs, that is, nearly 7 million more jobs than we have created. Those 8.9 million job losses would have been wiped out, and we would be in positive territory by more than 2 million jobs.
"The fundamental difference is about economic policy. In the 1980s, taxes were cut, deregulation was undertaken, and monetary policy was being refocused on price stability. That promoted risk taking, namely, entrepreneurship and investment, and boosted economic growth and job creation. Over the past several years, though, the focus has been on higher taxes, the threat of increased taxes, more regulation, and loose monetary policy. That has restrained risk taking, and therefore, greatly restrained economic and employment growth."