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Home Publications Blogs Beat the Press We Need 90,000 Jobs Per Month to Keep Pace With the Growth of the Population

We Need 90,000 Jobs Per Month to Keep Pace With the Growth of the Population

Saturday, 09 July 2011 05:54

In an article on the June employment report the NYT told readers that the economy needs 150,000 jobs per month to keep pace with the growth in the population. Actually, the Congressional Budget Office projects that the underlying rate of labor force growth is now just 0.7 percent annually. This comes to roughly 1,050,000 a year or just under 90,000 a month.

This is fortunate since the economy has created less than 1.8 million jobs in the 16 months since it first began adding jobs again in February of 2010. If we needed to create 150,000 jobs a month then we would have needed 2.4 million jobs to keep even with the growth of the labor force, so we would be considerable further behind where we were in February 2010. As it stands, we are roughly treading water with job growth that has been pretty much even with the growth of the population over this period.

Comments (8)Add Comment
written by GP, July 09, 2011 8:15
Great post! Thanks for laying it out so clearly
Labor Force Growth
written by Robert, July 09, 2011 9:11
Sure, but "the growth of the labor force" isn't exactly something natural and beyond the realm of public policy like plate tectonics. It is driven by post-1965 immigrants and their descendants (several million of whom have been allowed to settle in the US even since the Great Recession) who drives down wages by increasing the supply of labor.
Thanks for the sat blog post
written by Wayne b, July 09, 2011 9:30
Dean--just saying, when I get busy in the hayfield, you are my only read (sorry, PK!) so it's good to see you weigh in this morning with your usual sensible stuff!
Underlying Reason
written by veblen, July 09, 2011 11:02
What is the underlying reason for the decline in the growth of the labor force? It must in part be due to a decline in adult population growth, but are there other factors, such as more people going to school, which impacts it.
written by urban legend, July 09, 2011 2:42
Sorry, Dean, but I think you are wrong about this. The relevant base is not the civilian labor force, which, after all, is affected by people dropping out of the labor force altogether because jobs cannot be found, but the civilian non-institutional population. It grew last year by 2.03 million from 235.8 million, 0.86 per cent rate -- which means that, while you are certainly correct that the NYT's 150K per month statement is greatly exaggerated, the more accurate number would be about 110-120 K per month. At only 90 K per month, the employment-to-population ratio will continue to drop.
cheap true religion, Low-rated comment [Show]
Is the CBO truth?
written by thorstein, July 10, 2011 11:03
Just a caveat, the CBO number is derived by human beings, just like other human beings who create numbers like 120,000 per month or even the 150,000 a month number. I think the more accurate statement should be that there is a range of estimates. The post does, however, do an excellent job of laying out the potential implications of the policy conclusions one would draw based on where they fall on that range of estimates.
written by urban legend, July 10, 2011 2:19
Thorstein -- No, this is not a matter of estimates except in the most technical sense. We know with a very high degree of precision how much the civilian non-institutional population will grow over the next 12 months. It's a pure calculation: if we are to retain the same employment-to-population ratio (the best measure of the health of the labor market) -- i.e., keep up with the growth of the population -- then the total employment number must increase by the same percentage. Anything less means that we are losing jobs in real terms.

However, I have to take it all back, I'm ashamed to say: Dean's 90,000 per month figure is correct. I was using the 2009-2010 difference for population growth (from the table I first found) and figured the same percentage increase would apply going forward. Bad assumption: the population growth (civilian non-institutional population) has slowed considerably in recent months. The annual growth in jobs needed to match the growth in population over the past year is about 1.06 million jobs, which is, indeed, somewhat less than 90,000 per month. It may indeed be even less if the more recent slowing continues (I assume that projection data is available somewhere).

At any rate, sorry, Dean, and I need to do my own Emily Litella moment: "Never mind!"

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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.