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Friday, June 01, 2007


Job "growth" and population inflation

Several years ago I coined the phrase (not yet picked up by anyone else as far as I know) of "job-inflation adjusted" employment numbers by analogy with "inflation-adjusted" income (in retrospect "population-inflation adjusted" might be a better phrase). I'm prompted to raise the subject again by today's glowing headlines trumpeting "Rebounding US economy adds 157,000 jobs," accompanied by text like "US employers added 157,000 jobs in May, the Labor Department said Friday in a sign that the world's biggest economy is regaining vitality" and with economists describing the 157,000 as "healthy job growth."

But 157,000 jobs added in a month isn't "job growth at all," any more than a 4% raise in a year that inflation is 4% is "income growth." The fact is that 157,000 is almost exactly the break-even point at which job growth matches population growth. It does mean that things aren't getting worse (i.e., there aren't enough new jobs for all the new job seekers), but it certainly doesn't imply things are getting better either.

But you'd have no clue to any of that reading the press reports about this "rebounding" and "healthy" economy.

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