There is a lot of confusing data and a lot of inaccurate claims about the US labor market and US unemployment in the public discourse. A lot of the discussion tries to paint a more optimistic picture about US unemployment and US economic recovery than what the data warrants. The US labor force participation rate has decreased by about 2% since before the onset of the Great Recession. This means the unemployment number would be higher by 2% compared to the current numbers if the labor force participation had remained at the pre-Great Recession levels. Moreover, the underemployment rate is at a high level of around 15% and can be expected to have an effect on the sustainability of the recovery from the Great Recession.
Those who want to stress spending cuts as the best way to reduce the US budget deficit should keep in mind that a private sector whose recovery from the Great Recession is not very solid will find it very difficult to absorb any job losses in the public sector due to government spending cuts. This should be considered along with other factors like the welfare aspects of government programs and the availability of good private sector alternatives to them.
The fact that GDP growth rate recovery from the Great Recession became delinked from job creation to a significant extent in the early stages of the recovery, similar to the recovery from the recession of the early 2000s, should be a matter of grave concern for those that care about the stability and the growth of the US economy. It is time to seriously examine and to question all claims about recovery in the US economy that neglect the employment aspect.
by C. Jayant Praharaj ( send comments to [email protected] )
Those who want to stress spending cuts as the best way to reduce the US budget deficit should keep in mind that a private sector whose recovery from the Great Recession is not very solid will find it very difficult to absorb any job losses in the public sector due to government spending cuts. This should be considered along with other factors like the welfare aspects of government programs and the availability of good private sector alternatives to them.
The fact that GDP growth rate recovery from the Great Recession became delinked from job creation to a significant extent in the early stages of the recovery, similar to the recovery from the recession of the early 2000s, should be a matter of grave concern for those that care about the stability and the growth of the US economy. It is time to seriously examine and to question all claims about recovery in the US economy that neglect the employment aspect.
by C. Jayant Praharaj ( send comments to [email protected] )