TEXT OF COMMENTARY
Kai Ryssdal:Here’s today’s Marketplace pop quiz, you ready? What do Saks, Borders books and Northrop Grumman have in common? If you answered that they’ve all announced layoffs this month, go ahead and give yourself a gold star. Job losses are the story of this recession.
But commentator and New York Times economics columnist David Leonhardt says we’re ignoring a major plotline here.
David Leonhardt: These recent layoffs, among others, might be considered symbols of the economy’s struggles. But as symbols go, they happen to be a little misleading. Layoffs are not the job market’s main problem today. And they were not the main problem during our recent Great Recession.
On the first Friday of each month, like tomorrow, the Labor Department releases its job report. That report tells us how many jobs, on net, the economy gained or lost in the previous month. For August, forecasters are expecting a loss of more than 100,000 jobs.
Whatever the number is, it will hide much, much larger numbers of hirings and firings in any given month — lately, about four million of each. Think of it this way: The economy may have created four million new jobs last month, but it also eliminated 4.1 million old jobs, leading to a net loss of 100,000 jobs.
When you dig into these numbers on hiring and firing, you see that firing hasn’t been the issue recently. Hiring has. Even at the depths of the Great Recession, in early 2009, the firing rate was still a bit lower than it had been during the comparatively mild 2001 recession. The hiring rate, on the other hand, plunged 25 percent between 2007 and 2009. That rate has rebounded somewhat since then but remains rather low. Throughout much of the last decade, in fact, the hiring rate has been falling.
It’s easy to look at today’s economy and to think that there is too much change, too much flux. Really, however, there is not enough change. We haven’t been making the investments that can create lots of jobs. Educational attainment has slowed in recent decades. The federal government has cut its commitment to scientific research and other investments — the kind that created the interstate highway system, the moon landing and a Pentagon project we now know as the Internet. Corporate investment has failed to fill the void.
So the next you time you hear one of those layoff announcements, remember that it’s only half of the jobs equation. And it’s not the half that’s is likely to determine how quickly the economy returns to health.
Ryssdal: David Leonhardt writes The Economic Scene column for The New York Times.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.