A Point about a Jobs Chart That Seems to Have Been Missed

The following chart, showing the job losses that have occurred in the nine economic recessions that have occurred since World War II and the rebound in job growth following those recessions, very recently appeared in Business Insider.

Jobs Chart

The chart has been taken from the site Calculated Risk, and the brief accompanying article quotes Bill McBride of Calculated Risk on the chart’s implications: “”The dotted line is ex-Census hiring. This shows the depth of the recent employment recession — worse than any other post-war recession—and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.”

I have seen similar comments on the slow recovery in job creation in the aftermath of the Great Recession. But what this chart makes very clear—and what I have never heard or seen any commentary on—is the pattern that has developed over the last three recessions.

Notice that the first eight post-war recessions are all bunched together on the chart and that there is no particular chronological pattern. But the last three recessions are clearly outliers and that each one becomes an even more pronounced outlier.

The explanation for this pattern seems very straightforward. Employment in American manufacturing has been declining since the extended economic downturn of the late 1970s and early 1980s. In the 1980s, employment in that sector was maintained in part by the dramatic increase in defense spending under President Reagan. When that spending was curtailed, the erosion became more apparent. But the prolonged economic prosperity under President Clinton concealed the accelerating erosion of employment in manufacturing—if not the reality of it, then at least the broader economic impact of it. The 2001 recession served to make the reality of it much more pointed. But the housing bubble during much of the presidency of George W. Bush fueled a dramatic expansion of the construction industry, which absorbed many of those who had been employed in manufacturing. The collapse of housing in the Great Recession has left all of the working-class people who would have formerly been employed in manufacturing scrambling to make ends meet, relying on low-paying jobs in retail sales, food service, medical care, and the burgeoning warehouse industry. Most of these jobs are part-time, an increasing percentage are contingent (employment through agencies rather than by companies), and almost none provide benefits, increasing the economic squeeze on the working class.

If the economic expansion and increasing unionization of the 1950s and 1960s brought working-class Americans into the middle class, the decline of employment in manufacturing that has been increasingly evident over the last three recessions has recreated the distinction between middle-class and working-class. This pattern is a major contributor to our sluggish economic growth, the increasing concentration of wealth in our country, and the growing sense of economic desperation being expressed through the inflammatory, reactionary rhetoric of Far-Right political groups. Such measures as increasing the minimum wage, providing affordable health care, and creating labor-intensive public jobs programs are all necessary, but temporary, stop gaps. What is really needed is the development of new economic sectors that can provide employment at a more middle-class level for the increasing number of working-class Americans. And any supposed solution to the challenges currently facing higher education that does not take into account the increasingly different economic needs of those who are currently middle-class and working-class is going to be, at best, only a partial solution.

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