The Disappearing Private-Sector Jobs

Robert Higgs
Investor’s Business Daily

Unless private employment growth resumes soon, the United States risks falling into the same long-term economic sclerosis that has plagued the welfare states of Western Europe for decades.

Large, frequent and unsettling changes in government policies already have made private planning, especially for long-term investment, too risky for many private investors to bear. The results have been devastating.

Mindful that both the public and policymakers place heavy emphasis on “jobs,” I have been reviewing the Bureau of Labor Statistics’ employment data. At this point, most everyone knows that the official rate of unemployment has risen greatly since 2007 and lately has been stuck in the neighborhood of 10%.

Total nonfarm employment peaked in 2007 at 137.6 million, fell slightly in 2008 and then dropped precipitously in 2009 to 132 million, for a two-year loss of 5.6 million jobs. In 2009, total employment was approximately equal to its level in 2001, though the labor force had grown substantially in the interim, making the 2000-2009 period America’s second “lost decade” (the first being the 1930s during the Great Depression)…

…We find that the loss of employment has occurred entirely in the private sector, where employment fell from 115.4 million in 2007 to 109.5 million in 2009, a decline that took private employment back to its level at the end of the 1990s.

While private employment was collapsing, government payrolls have been increasing, ticking up slightly from 22.2 million in 2007 to 22.5 million in 2009, an increase of roughly 1.7 million above the 2000 level…

The entire article is at IBD.

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