Thursday, October 04, 2012

The long term trend in U.S. employment

Source: Wikipedia
I thought this graph was interesting. As expected, as the total population has increased over time, the trend is for more people to enter the work force each year. 

For most of the 70+ year period there were periodic dips in employment, no doubt corresponding to the recessions that occurred every few years. Again as one would expect, the greater the population, the greater the work force, the bigger the dip in the graph.

However, from 1960 to  1974 there was a sustained growth in the workforce. The 1973 oil crisis led to a recession the following year.

However, something different happened in 2001. The cyclical dip in workforce in the last decade was not followed by a recovery like those of previous years. The rate of recovery of employment was less than would have been expected. More importantly, the recovery was cut short by the Great Recession.

Of course this is not news. The economic profession recognized that the housing and financial crashes created the worst economic conditions since the Great Depression, and massive stimulus packages were agreed by both parties while the Federal Reserve used emergency measures in monetary policy.

Still the graph shows the change in the employment picture graphically, helping one to understand the difficulties marking the Obama administration's efforts to restore full employment.

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