US employment back to normal in 2016, 2027, or never?

The New York Times visualized here three scenarios for how long it will be before we get back to the 1990-2007 percentage of the US population over age 16 that is working. Clearly, if we continue adding jobs at the 2010 pace, the answer is never--an ever-shrinking fraction of our population will have to generate all the personal income that will support all of us, meaning that on average American families will have less and less income every year.  If jobs are added at the same rate they were during the "recovery" years of 2004-07, it will take until about 2027 to get back to the baseline percentage of the population in jobs.  Even if we suddenly start to add jobs at the highest rate we ever did in the last 20 years--the brightest scenario that anyone can even imagine--the percentage of people working will still be below baseline until 2016. 

Our two major political parties agree that nothing substantial can be done, or should be done, to improve these outcomes.  Both parties are saying, in effect, that they will be better at managing America's economic decline.  Doesn't this create a big opening for a third party with a commitment to, and a believable plan for, rapid growth in employment and real wages to restore the prosperity of the 1990s?  I'd join.

Update on Friday, November 5, 2010 at 07:21AM by Skeptic

Based on what some say is a "strong" jobs report today, employment will return to the baseline level by 2030 or so, according to Paul Krugman's estimate. 

Update on Saturday, January 1, 2011 at 07:44AM by Skeptic

Here, Paul Krugman uses FRED data to demonstrate Okun’s Law—the relationship between growth and unemployment. He finds that it takes 2.5% annual GDP growth to keep the unemployment rate from increasing and 2 additional percentage points of growth each year to bring down the unemployment rate 1%.

Put it this way: suppose that from here on out we average 4.5 percent growth, which is way above any forecast I’ve seen. Even at that rate, unemployment would be close to 8 percent at the end of 2012, and wouldn’t get below 6 percent until midway through Sarah Palin’s first term. 

Comments

[Paul Fernhout]

I put together a knol about moving beyond a jobless recovery that includes a related discussion about the problems of finding 30 million new US American jobs over the next decade to bring us back to where we were in 2000. I also included a worrisome chart about what might happen if US productivity continues to rise and demand stays flat leading to vast amounts of increased unemployment. See: Beyond a Jobless Recovery: A heterodox perspective on 21st century economics

In brief, a combination of robotics and other automation, better design, and voluntary social networks are decreasing the value of most paid human labor (by the law of supply and demand). At the same time, demand for stuff and services is limited for a variety of reasons — some classical, like a cyclical credit crunch or a concentration of wealth (aided by automation and intellectual monopolies) and some novel like people finally getting too much stuff as they move up Maslow’s Hierarchy of Needs or a growing environmental consciousness. Offshoring, while a serious problem for US workers, is a red herring as far as understanding the underlying long term trends.

In order to move past this, our society needs to emphasize a gift economy (like Wikipedia or Debian GNU/Linux or blogging), a basic income (social security for all regardless of age), democratic resource-based planning (with taxes, subsidies, investments, and regulation), and stronger local economies that can produce more of their own stuff (with organic gardens, solar panels, green homes, and 3D printers). These solutions all build on trends that are already happening -- for example, between K-12 schooling and the over 65 crowd, about one third of US citizens are already having about $1000 a month given by the government on their behalf, so we are already one third of the way to a basic income for all in the USA, and such guaranteed payments have already been a society-wide financial backstop in the current Great Recession. There are some bad “make work” alternatives too that are best avoided, like endless war, endless schooling, endless bureaucracy, endless sickness, and endless prisons.

Simple attempts to prop things up, like requiring higher wages in the face of declining demand for human labor and more competition for jobs, will only accelerate the replacement process for jobs as higher wage requirements would just be more incentive to automate, redesign, and push more work to volunteer social networks. We are seeing the death spiral of current mainstream economics based primarily on a link between the right to consume and the need to have a job (even as there may remain some link for higher-than-typical consumption rates in some situations, even with a basic income, a gift economy, etc).

The sooner our major social institutions accept these global trends and start crafting solutions for a new socioeconomic paradigm of cooperative abundance for all, the sooner we will get out of this economic mess.