Tag Archives: unemployment

10 Charts of the Year — Job Creation

Today’s Chart of the Year comes from The Hamilton Project and it shows just how long it could take for our economy to make up the jobs lost in the last recession.

What does this chart mean?

This chart shows how the jobs gap has evolved since December 2007 and shows three different scenarios for different rates of job growth. If the economy adds about 208,000 jobs per month, which was the average monthly rate for the best year of job creation in the 2000s, then it will take until February 2024 — over 12 years — to close the jobs gap. – Michael Greenstone, Director, The Hamilton Project

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10 Charts of the Year — Tax Rates and Job Creation

Today’s Chart of the Year comes from the Center for American Progress.  It shows the average percent growth in employment by the top marginal income tax rate for the last 60 years.

Source: Center for American Progress

What does this chart mean?

All year long, the country has been engaged in a debate over the best way to spur job creation, especially in the context of widening budget deficits. The year began with a deal to preserve the Bush tax cuts, including those for the wealthiest 2 percent of Americans, and it concluded with a fight over whether millionaires should pay higher taxes to offset the cost of the payroll tax cut. This chart neatly puts the lie to the notion that lower marginal tax rates for the wealthy will produce enormous job growth by showing that, over the past sixty years, the economy has actually produced far more jobs when the top income tax rate was higher. — Michael Linden, Director of Tax and Budget Policy, Center for American Progress

Disturbing labor market trends

Economist John Haltiwanger of the University of Maryland is one of the nation’s leading experts on job creation and firm dynamics.  Some graphs from his recent research (also summarized here) reveal some disturbing trends in job creation that help to explain what is going on in our labor markets.

The first chart breaks down the net change in employment into its component parts — job creation (expansion by existing companies plus new companies) and job destruction (contraction by existing companies plus firms that go out of business).

Focus on the orange line — the rate of job creation.  Since the economy started to turn towards recession in the late 1990s, the rate of job creation has never recovered to the level seen throughout the 1990s.  So the large spike in unemployment that resulted from the 2008 recession was less about job destruction (which was at similar levels to the 1990s) but more about the lack of new jobs being created.  Even today, in the slow recovery we are seeing, changes in unemployment are more the result of reduced levels of job destruction — not increased levels of job creation.

The second graph shows a figure called the unemployment escape rate — the percentage of people unemployed who find a job in the next 30 days (the blue line on the graph).

What you see on the graph tends to reflect what you would expect to see — the escape rate drops during a recession (the gray shaded areas) and then recovers fairly quickly once the recession ends.  The disturbing thing about this graph is that the escape rate is trending lower in recoveries over time.  The unemployment escape rate during the best time of the 2000s was roughly equivalent to the escape rate during the recession of the early 1980s.  That has made the drop during the most recent recession tougher to overcome.  A lower escape rate translates into more people unemployed for longer periods of time.  We already had a larger than normal number of long-term unemployed before the 2008 recession, and now we have an extremely serious problem.


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