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How Many Jobs Do We Need: Teaching

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How Many Jobs Do We Need: Teaching Arithmetic To Economists
Sunday, 09 October 2011 08:10 I hate to harp on a seemingly small point, but it does offend me that professional economists and people who write on economics have such an aversion to simple arithmetic. One of the numbers that frequently in appears in discussions on the state of the economy is the number of jobs that we need to keep pace with the growth of the labor force. I have consistently been using 90,000 a month, however I see considerably higher numbers routinely thrown out, sometimes as high as 150,000 a month. For example, this Post article on the September jobs numbers told readers that the economy has to create 125,000 jobs a month to keep pace with the growth of the labor force. There are two different ways to get to my 90,000 a month number. The first is to take the Congressional Budget Office's (CBO) estimates of the potential growth of the labor force. Its latest reports put this at 0.7 percent annually. Payroll employment peaked at just under 138 million before the downturn. Assuming normal growth, we would be at 142,000 million today Seven tenths of a percent of 142 million translates in 994,000 jobs a year, or roughly 83,000 jobs a month. Of course CBO is not God, they could be wrong. But on the other hand, since their projections on the deficit are treated with such enormous reverence in the same news outlets, it would be absurd to just dismiss the economic projections that provide the basis for the budget projections. In other words, if we take CBO's budget projections seriously, then we must take their economic projections seriously. The latter are the basis for the former. The other way we can get to the 90,000 a month number is by taking the Bureau of Labor Statistics (BLS) estimates of the growth in the non-institutionalized population and multiply by the employment to population ratio (EPOP). According to the BLS, the non-institutionalized population grew by 1,750,000 last year. If we apply assume a pre-recession EPOP of 63 percent, this implies an increase in employment over the last year of 1,103,000. If we assume that 6 percent of these workers will be self-employed (the average for the current workforce), this implies that we would have needed 1,036,000 payroll jobs to keep pace with the growth of the labor force over the last year, or 86,000 jobs a month. This is how I get my 90,000 jobs a month, I don't know where others get their higher numbers. Again, this is not an especially important point in the context of an economy that is missing 10 million jobs, but the lack of respect for arithmetic is. It was a lack of respect for arithmetic that caused almost all economists and economics reporters to miss the housing bubble and the stock bubble before it. If we can't prod the people at the top of the profession to do the simple arithmetic that underlies the claims they make about the economy then we are in serious trouble. About Beat the Press Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean. Archives

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Chickens, Eggs and the Labor Force: Which Comes First written by izzatzo, October 09, 2011 11:39 One of the numbers that frequently in appears in discussions on the state of the economy is the number of jobs that we need to keep pace with the growth of the

blogspot. 2011 12:35 I'm afraid economists got their 150. just not your math.42k per month. . you get 200k. Divide by 12 is 171. I have no idea why you harp on this each month. The labor force doesn't just arrive on the scene and demand the number of jobs necessary to keep it fully employed. +1 And graphs. which frankly vary way too widely for my tastes. Arithmetic indeed.000 jobs written by Robert Oak. which admittedly deserves a great deal of blame. you get 125. October 09. This mon-mon adjustment that's really for the year throws off the base non-institional civilian population number. +1 http://ecologicalheadstand. one gets 107. instead of averaged out going back for that year. Don't count job entitlement chickens before they hatch which only creates an unnecessary labor surplus falsely labled as 'unemployment' via those willing to work but can't find it. Let chicken demand come first and egg supply will follow to maintain an organically balanced equilibrium free of surpluses and shortages. Take that times 62. estimates. depending which start and end data point (date) one uses. And the citizens. can do nothing.47 jobs. And so they neglect the role of the health care system in damaging the economy. but (unlike Dean) didn't take the trouble to say so very often.labor force. all likely to inflict needless pain on our fellow citizens. The fact is the BLS does an annual adjustment. If that was the case large families would get more income than small ones.4k jobs needed to keep up with population growth. without adequate data about where things were going (which could have been partially remedied by a little education and a few dozen big graphs) were easily distracted by emotive issues. October 09. I personally never give an absolute number on the number of jobs needd each month and then declare "this is the number". If one takes civilian non-institutional population growth from Jan 2010 to Dec. Any economist knows demand creates supply. Really. Supply does not create demand. spurring a perverse incentive to increase the labor force even more until it implodes from massive unemployment. 2011 3:53 I think they are "doing math". Take the monthly reported increase in non-institional civilian population for September 2011. for the people whose silly leaders follow them written by Rachel. such as the massive influx of immigrants below age 30. now that should create a slew of fictional press reports complete with bad math and where the real fun will start. For it to add up reverse the question and ask how much labor is necessary to satisfy the existing level of demand. I show a few calculations and give ranges. Too busy talking about whatever more emotive issues were occupying their followers at the time.057 million increase. all hell is going to break loose for January 2012. October 09. 2011 12:55 Part of the problem with the housing bubble was the economists who knew that it was likely to burst one day.000 number from the same place they get most of the rest of their ideas: from groupthink. certainly short of adequate leadership.7%. Take Dec 2007 civilian non-institutional populationt to employment ratio.com written by Sandwichman. without the necessary knowledge (or even basic graphs). Stupid liberals. And their followers. And now many people are putting all the blame for our troubles on Wall Street. It's completely dependent upon civilian non-institional population estimates. but only between Dec-Jan. 2010.7%. the 2010 Census data is incorporated. +1 125. 62. one gets 2. or people working longer or baby boombers. We have not even gotten to age categories. when finally. And all the while the various interest groups are pressuring Congress to produce new health plans.

What's wrong with just having some data in this globalization/labor arbitrage age? We have illegals. written by urban legend.. you name it. when looking at occupations. Sorry on previous comment. I think the Census/BLS should track immigration status too.+1 margin of error written by Robert Oak. non-institutional. but if we want to just take a shorter period we can look at 3-month interval I was using as the basis for comparison.or. CPS is 400k. regardless of statistical algos for yearly adjustments. leaving payroll growth of just under 115..ld-survey Having monthly non-farm payrolls below the margin of error.0 percent of these would be self-employed. 2011 10:49 It's simply old data that was roughly correct before 2010. October 09. +0 wish the Non-institutional Pop was more accurate written by Robert Oak. I was looking at the estimate of population growth over the last year. why would we make a big point of reporting anything other than the central estimate with the labor market data? +1 . Since then.. October 10. that many reporters do not read the actual government reports has to be true from so many "headline buzz" articles that miss completely what the data actually implies. for example. 2011 4:13 Why not talk about the margin of error? The reality is there is a 100k monthly margin of error on payrolls. it makes no sense to me and why they don't go back over the monthlies and modify each month. written by urban legend. is notorious..000 a month.. I did an overview on that http://www. with the January data. The latter are huge and never ever reported. 2011 1:06 Why assume EPOP of 63%?mptame Keeping up with non-institutional 16+ population growth at any given time merely means applying the EPOP at that time.) BLS projected that the non-institutionalized population grew by 582.000 a month. where NIVs are used to labor arbitrage. but we could ignore than for now. 2011 2:47 Dean: I think the monthly report which separates out those reading the BLS report and numbers versus reporters aping some number they got somewhere is the February release. (I would argue that annual projections are somewhat more accurate than the projection for any specific month. October 10. Assuming an EPOP of 63 percent. and 135-150K is outdated info suitable for lazy reporters. CPI. Of course there are confidence intervals around these numbers.000 between June and September or 194.000 a month. is scary as hell to me. Not just on the unemployment report. STEM.economicpopulist. Urban Legend: . we should expect to see employment growth of 122. October 09. +0 BLS on Population growth written by Dean. +0 .no spell check in IE forms. using the 2000 Census base for 11 years has to be putting in some bias. What bothers me about the BLS is that yearly adjustment done on just DecemberJanuary boundary. offshore outsource. but there are also confidence intervals around the budget numbers. 4 of the last 5 months. Then. trade. Your overall premise. esp. Right now. 85 or 90K is the better estimate now. but manufacturing. alphabet soup of NIVs (temporary foreign guest worker Visas) that are included in the employment statistics and it biases the numbers. Roughly 6.. Since that's where the yearly population adjustments are. it's just a little over 58%. 2011 12:20 Robert. as has the employment-to-population ratio. October 10. that population growth rate has dropped precipitously.

000 per month to 99. politics.us-method/ +0 Write comment (Only one link allowed per comment) Show/hide comment form This content has been locked. 2011 6:07 Nice job on explaining your labor force assumptions. exclusively. 2011 2:52 1921-2003 Democratic presidents created 1. with that large end of year adjustment. October 11.My point really is if one just looks at the monthly and takes an EPOP of 62. on the other hand. Here is a link to how they actually calculate unemployment. Suite 400.000. is it more accurate to go with just the monthly increase and estimate "jobs needed" or the yearly? I get your use of yearly. NW. 58. +0 lifeaholic of america political historian written by clarence swinney. detailed and accurate labor statistics and part of the reason we can't get it.800. -1 clear explanation of assumptions written by scott moore. into "not in the labor force"..000 jobs per year to Republican 800. Washington. including labor force. and they do it every month. You can no longer post any comments. It is a project. If you take the current one. is Congress. you hide the # of needed jobs by throwing people who just arrived. funding. Carter + Clinton created 222. Also.they are beholden to statistics. Powered by Azrul's Jom Comment for Joomla! Home | Research Topics | Jobs/Internships | Contact | Log-in 1611 Connecticut Avenue.2%.. considering the "not in the labor force" has so dramatically increased. considering the unemployment rate is based on the monthly Non-institutional population as shown in the report. DC 20009 | 202-293-5380 ***This site best viewed using Mozilla Firefox*** .com/20. plus the 2000 Census base being used. As to the BLS and why they do what they do. http://connectmooredata.7%.. but what I really want is more precise. October 11. To sum: Sure I want a better press corp. although it would kill my hobby here. the report is deriviing ratios and unemployment rates and so on from the monthly number. esp. that's the ratio for 2007 unemployment rates. increased overall pop..000 per month by Reagan + Bush I + Bush II Wealth creates jobs? Ha!Try Bush 8.

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