The average unemployment rate in the U.S. fell to 9.0% in January 2011 even though job growth in the private sector remained sluggish at 36,000 (total). While the job growth numbers are sobering, the unemployment rate has fallen from 9.8% since November 2010. These unemployment numbers are seasonally adjusted meaning that the impact of job hiring over the holidays is factored out. Underemployment takes into account the fact that many workers who would like to be full-time are only able to find part-time work. Underemployment is up to around 17% in January 2011, up from around 9% in December 2007. Ben Bernanke, Chairman of the Federal Reserve Open Market Committee, recently stated that the unemployment rate in the U.S. will remain high for a long period of time, which many economists believe likely means unemployment rates of 8-9% through 2011 and 2012.
So, where does job growth come from? Primarily private sector jobs are created by firms that expect to be able to make a profit if they hire an additional employee. Public sector job growth must come from state, local, or federal tax revenue dedicated to hiring teachers, police officers, regulators, and many other jobs. Should Congress do something and intervene? Given that the GOP regained the House of Representatives in November 2010, there is little likelihood of another government spending stimulus or further support for states. Instead many expect to see government spending cuts and also tax cuts. However, it should be noted that spending cuts will also lead to job cuts at the federal, state, and local level.
There must be some hope on the horizon. January 2011 showed a rise in manufacturing jobs, but declines in many other categories. However, we have seen long declines in the number of manufacturing jobs. President Obama called on 100,000 new math and science teachers, but state and local governments are cutting spending on education. So, where are the jobs?
Questions you might answer
- Do you think the problems are understated or overstated by the commentators listed above? Find some alternative evidence.
- Should we rely on the private sector to do most of the hiring or should the public sector be called on to create new jobs?
- What jobs are going to be doing the most hiring in the next few years even with sluggish growth? (Give me numbers.) How has education in these fields been progressing throughout the crisis? Are these sectors hiring the “underemployed” now? Do these new hiring sectors provide better wages or better benefits?