A recent survey of economists by the Wall Street Journal found that the U.S. economy needs to add an estimated 145,000 jobs per month to hold the unemployment rate steady. If more jobs than this are added to the economy, the unemployment rate is expected to decrease. On the other hand, if less jobs than this are added, the unemployment rate is predicted to increase.
Economists estimating the break-even job growth have to take several figures into consideration. Population growth and the amount of people graduating from high school and college must be accounted for. Economists also must consider the amount of people reaching retirement age. With many baby boomers reaching retirement age, lots of jobs are freeing up, thus leading to less new jobs being required. The number of people re-entering the labor force must also be taken into consideration.
In the mid-1990s to early 2000s, economists estimated that the U.S. needed 200,000 to 250,000 new jobs created each month in order to keep the unemployment rate steady. Many believe that this decrease in the break-even job growth shows the aging of the labor force.
It is important that economists make these kind of estimates to better track the progress of our economy and how circumstances may change in the future. With more and more baby boomers retiring, the economy may not be able to experience as much growth in terms of jobs.
http://blogs.wsj.com/economics/2016/04/07/the-new-magic-number-for-monthly-job-growth-145000/
I think this article is extremely relevant to us today. As college students, most of us are here to gain important skills and eventually find a job in the work force. Unlike the past where a large amount of the baby boomers occupied jobs and had the same jobs for years, now since they are retiring, this frees up more and more jobs for younger people our age. However, as the article does point out, in order to keep the labor force steady (at the natural rate or the steady state) it seems like people our age and people just entering the labor force will have to take the unoccupied jobs of the baby boomers instead of creating new ones. If we are just trying to fill the jobs of the past, I wonder how this will effect the innovation of our industries in future years?
ReplyDeleteThe interesting thing comes into my mind is that, if the Fed keeps adding more than 145,000 jobs to the labor market every month so as to keep the unemployment rate lower than the natural unemployment rate, will this action lead the inflation rate to an unexpected higher level?
ReplyDeleteHilary brings up an interesting point, I believe as time goes on and innovation is prospering in industries like tech we'll see brand new jobs created thereby helping with keeping the unemployment rate at a steady rate or lowering it. This idea of filling the jobs of the past will continue for the time being, but as time moves forward we'll see these jobs evolve as technology continues to evolve.
ReplyDeleteI agree with Hilary as well in many aspects. First, this is very relevant to us as soon to be college graduates entering the labor market. It appears that we are entering it in much better circumstances than really anyone else has in the past 6-8 years. I think it is important as well to keep in mind that 145,000 "new" jobs means jobs that are also being left by people retiring which I would imagine would be a significant portion. However, I don't think that we should be concerned by a lack of innovation like Hilary proposed since many of us are just replacing the baby boomers. Although we are taking their positions, I believe the job's responsibilities and the industries themselves are constantly adapting to the changing world, and we will only add to that change.
ReplyDelete