Wednesday, May 18, 2011

Lazear on the job market blues

Former Harvard classmate and chief Bush 43 economic advisor Ed Lazear has a WSJ op-ed this week that takes a more careful look at the job market.  Most news reports focus on the change in employment from month to month, which is mistakenly interpreted as the number of new jobs (if employment has increased) or the number of jobs eliminated (if employment has decreased).  Actually millions of jobs are created and destroyed each month.  Lazear notes that employers hired four million workers in February 2009, a time when the labor market was thought to be in the deep freeze.  Guess how many workers were hired in March 2011?  Four million!  Employment grew by 200,000 two months ago because there were 3.8 million job separations (layoffs or quits).  Employment plummeted by 700,000 in February 2009 because there were 4.7 million separations.

For the job market to get healthy, Lazear estimates we need to have hiring return to the pace of 2006 and 2007 of 5.5 million jobs per month.  With 13.7 million unemployed workers, it will be hard to bring unemployment down without a sharp uptick in hiring.

1 comment:

  1. I believe it is getting a a little better in the UK. Retail jobs sector has been doing well. One of the reasons is that big high street retailer have modified their man hours to employ more, probably in exchange for some tax waivers from the government.