Given the size of the U.S. economy we should ask not only the question of why are the employment numbers so low, but also whether those expectations are warrranted. Should employment in the U.S. grow by over 200 thousand workers month after month? Or should this figure be higher yet? This is an issue that I examine in this post and come to the conclusion that indeed we should expect employment to increase by more than 220 thousand workers, in fact historical data suggest we should be adding between 300 thousand and 350 thousand new jobs a month.
Strong Job Growth
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0uK-QeD03-ghppmw9mA6mSLmqB2ZaUPDSAM2raBZKZHCtcUBwP00RyCjXyrduXuBXyJZrjqjOwd0m9EwR6zu_fRXUzaYtnThhXTanueI0ED-0FMlQtOD6KTmX8-qqwY8IGpnA7b301Jg/s320/New+Jobs+Charts.jpg)
But we must realize that employment growth of two million when the total base of workers is around 140 million is very different than when employment is smaller than this level, as in the late 60s when U.S. employment averaged less than half of today's with fewer than 62 million workers total.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQYi0TlrTw_JnKq8fwnW28Sh3prNVp6P3ImWlV-BQquXpuNX7R7fpkBoWBA8FgsJxCBk455WnS3w-ZwgTErA2_cGCOAoDVasd81H-6g73RyRKSVBSXHyfXs-p0oGsnL6o9xp_RKDLebzA/s320/New+Jobs+Charts.jpg)
Consequently, when we look at the number of new jobs compared to total employment, we get a different pattern; this is shown on the chart to the right. The top graph is the same as the one above, "U.S. Jobs Growth- 000s", except that we are excluding all years in which employment fell. The red line is a moving average that reflects a five-year trend.
The bottom graph displays the percentage change in employment, with the red line also indicating the five-year moving trend of the percentages. We can easily discern that employment growth since the beginning of the century is under 2% annually, which contrasts with that maintained in the second half of last century that averages nearly 3%.
What should be the job expectations number?
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYXqSGmfXZX4oWDMr6BIdCSCfZTyWXu_1I5iJmqXgvp8u1E_UJAPpSsuZyJlPVVEei11dEedUX-PEkpJm2pPJGtgbEvTZ0oW_Lhmwt0cf3Sm6xAll3ltR9Hz-sbTEVgUpEP0Pln959upg/s320/New+Jobs+Charts.jpg)
We can see that job growth over the last ten years, at 1.7%, lags any other 10-year period since the end of the Second World War. Naturally the 4.3% growth seen by 1955 captures the robust private employment that absorbed all the soldiers discharged at the end of WWII. In the mid-1980s, the second highest period, reflects the impact of tax changes and other policies implemented in the early 1980s.
All in all, employment growth between 1946 and 1999 averaged 2.9%.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNP1ivDFocT3ExtG2uu2ytXhK599_cwWJ9TAecpux4e8A5TMsszabiZxhL4-w_ot8-2DOOL4FAfl2-_HNWg10k-x6Pd-E5u3bQkI2NHlT6ro2lc_UNoZXTd_bLRYiV91EqOO4iWNmUVlE/s200/New+Jobs+Charts.jpg)
On average, we should expect nearly 350 thousand new jobs added every month to stay in line with our historical growth. Last year, only three times did employment increase by more than 300 thousand jobs. The figure, which may seem high to some, should obviously be expected. The question that should be asked is why aren't we achieving these results more frequently? A proper answer requires an in-depth investigation of economic policies and their impact on employment and the nation's economy overall. But this is the subject of a future post.
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