Are Real Economists Bears?

Despite the optimism of the National Association of Colleges and Employers (NACE) about the job market, real data indicate that college graduates will encounter few jobs when they seek employment.

“Private-sector jobs in 2011 are fewer than they were way back in June 1999 [italics in original source],” Robert P. Murphy points out in the March 2011 issue of The Free Market, a newsletter published by the Ludwig von Mises Institute. “In the more than 11 intervening years, through immigration and natural growth the (civilian noninstitutional) U. S. population increased by 31 million people [Italics Murphy’s].”

“And yet we have fewer private-sector jobs in the country now than in mid-1999. There hasn’t been a comparable period of stagnant job creation since the late 1930s.”

For you history buffs, that latter milestone did indeed coincide with the Great Depression. Murphy is the author of the books Lessons for the Young Economist and The Politically Incorrect Guide to the Great Depression and the New Deal.

“To see just how unusual our current predicament is, it’s actually more instructive to look at the level of employment in private industry, because it’s harder to fudge these numbers,” Murphy contends. “During every recession, jobs were shed.”

“But the jobs would usually bounce back during the recovery phase. The last two recessions have changed that standard pattern.”

As it happens, the U.S. Bureau of Labor Statistics (BLS) came to roughly the same conclusion as Murphy, albeit in its own bureaucratic fashion. “One of the most striking features of the current downturn is the slowing of flows into employment, in contrast to the 2001 recession and most earlier recessions, which were marked to a greater extent by increased flows out of employment,”  Harley J. Frazis And Randy E. Ilg wrote in the April 2009 Monthly Labor Review put out by BLS. “Similarly, the early part of the current period of weakness was marked by a decrease in flows out of unemployment, rather than the usual increase in flows into unemploy­ment—although, more recently, rising inflows into un­employment have resulted in a jump in the jobless rate.”

 

“Both the decrease in flows into employment throughout the period from March 2007 to December 2008 and the decrease in flows out of unemployment in mid-2007 are consistent with a prolonged slowdown in job creation oc­curring alongside an increase in job destruction.” Frazis and Ilg are economists at the BLS.

 

Malcolm A. Kline is the Executive Director of Accuracy in Academia.

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