2.6 Million Jobs Lost in 2008
January 9th, 2009 . by economistmom
The news is bad, even a little worse than we expected:
NEW YORK (CNNMoney.com) — Another sobering government labor report released Friday showed the economy lost 524,000 jobs in December, bringing 2008’s total job loss to just below 2.6 million.
Last year’s steep drop in employment marked the highest yearly job-loss total since 1945, the year in which World War II ended.
Economists surveyed by Briefing.com had forecast a loss of 525,000 jobs in the month.
According to the Labor Department’s monthly jobs report, the unemployment rate rose to 7.2% last month from 6.7% in November and higher than economists’ forecasts of 7%.
And with October and November job numbers revised downward by 320,000 and 51,000, respectively, we’ve effectively lost 895,000 more jobs with just the new news in today’s report (524K + 320K + 51K).
That 2.6 million jobs have been lost in all of 2008 for all of the economy is startling, but that’s a reduction in total jobs (private plus government) of “just” 1.9 percent. It’s a much more distressing story when you dial down to what’s happened to private-sector jobs, manufacturing jobs, and auto industry jobs:
- Total private-sector jobs fell by 2.77 million in 2008, or a decline of 2.4 percent;
- total manufacturing jobs fell by 791,000 in 2008, or a decline of 5.7 percent;
- total production jobs in manufacturing fell by 712,000 in 2008, or a decline of 7.2 percent;
- and total auto manufacturing jobs (motor vehicles and parts) fell by 161,500 in 2008–a 16.8 percent decline (from 962,600 jobs in December 2007 to just 801,100 jobs in December 2008).
Here a link to the December 2008 employment report from the Bureau of Labor Statistics, and to the historical data I used for the above calculations.
Last year’s steep drop in employment marked the highest yearly job-loss total since 1945.
“Worst Job Losses Since 1945″ was the page one headline of the WSJ today and a story in every NYC newspaper. I did a Google News search on it and got more than 3,000 hits — so the press seems to be running with this meme, fast.
For perspective though, the labor force was only 58 million in 1945 and it is 154 million today, the drop is only about 35% of 1945’s. And running the annual numbers I found at FRED it turns out that as a % of the labor force — that is, really — the 2008 loss was only 4th worst over the time it was supposed to be the “worst”.
That’s not good, but it’s also nowhere near as bad as all those stories indicate. The worst year for employment by far was 1983, that’s the post-Depression low for employed percentage of the labor force.
Accurate press stories would be worried about “Worst Since 1983″, though I suppose that’s not nearly as headline grabbing. And 1983 itself was nowhere anywhere close to being as bad as the Great Depression, which means as to the 11,000 Google News hits I got for “worst since the Great Depression”…
Jim Glass wrote:
“Worst Job Losses Since 1945? was the page one headline of the WSJ today and a story in every NYC newspaper. I did a Google News search on it and got more than 3,000 hits — so the press seems to be running with this meme, fast.
For perspective though, the labor force was only 58 million in 1945 and it is 154 million today, the drop is only about 35% of 1945’s. And running the annual numbers I found at FRED it turns out that as a % of the labor force — that is, really — the 2008 loss was only 4th worst over the time it was supposed to be the “worst”.
I agree that a better perspective of the job losses is likely gained by looking at them as a percentage of the labor force, not in nominal terms. I likewise crunched the numbers at BLS and posted the results at this link. As can be seen, the 2008 job loss of 1.9 percent was less than the 1982 job loss of 2.3 percent and significantly less than the 1945 and 1949 job losses of 6.6 and 3.4 percent, respectively.
However, there are some other measures by which this job loss rates very badly. As Diane pointed out, the percentage job loss was worse in private-sector, manufacturing jobs, manufacturing production, and auto manufacturing jobs. Also, the chart she posted does show that the great majority of the job losses have occurred in the past four months. Finally, I noticed that only three million jobs have been created in the past eight years. This is an increase of just 2.3 percent, the lowest since before the 1939 to 1947 period (the earliest covered by the BLS data). The lowest since then was 7.1 percent from 1952 to 1960. The 2.3 percent figure does measure from a peak to the current low but this is still a historically low figure.
Still, I agree that the media does have a penchant for headline grabbing. The same is true of the titles of many books. For example, the title “Bankruptcy 1995″ was likely a poor name for a book and hurt the author’s credibility for selling any future books. However, I understand that the title “Serious Financial Problems in the Near Future” would not have been as eye-catching. In any case, I long ago learned not to pay too much attention to headlines and book titles.