“It’s gone on way too long to be temporary,” said John E. Silvia, chief economist of the fixed-income division of Wachovia Securities. “We have to treat it as a realistic transformation of the economy.”
That’s a quote from a terrific article out of the Washington Post last week on the structural changes in the U.S. Labor market.
Do not overlook it.
The point of how the U.S. economy can expand so briskly — but not create much in the way of new jobs — is illustrated through the example of Ken Gaebler’s marketing firm. You must read the entire piece to get the full flavor of the article; I’ll excerpt the relelvant economic discussion here:
More than two years into the recovery from the last recession, coming off a quarter with sizzling 8.2 percent growth in the gross domestic product, the U.S. economy has created only 278,000 new jobs in the past five months — leaving the nation’s total number of payroll jobs 776,000 lower than when the recovery began . . .
While economists agree there is more self-employment, they disagree about whether this is a temporary adjustment that will soon give way to more robust growth in traditional jobs, or a lasting change in the nature of work and the relationship between employer and worker. The answer to that question matters greatly to presidential candidates vying for office during a “jobless recovery,” as well as to Federal Reserve officials who must decide how long to leave interest rates at a 45-year low.
Fed policymakers have made clear in recent public comments that they will leave their target for a key short-term rate at 1 percent when they meet today and Wednesday, and probably for some time after that, in large part because of the continuing softness of the labor market. If and when the job market strengthens, Fed officials will have to decide how to start raising rates to prevent inflation from rising to undesirable levels.
‘A New Kind of Workforce’ Emerges
Surge in Number of Contractors Helps Explain Why Recovery Adds Few Jobs
By Nell Henderson and Kirstin Downey
Washington Post, Tuesday, January 27, 2004; Page E01