It is wise to approach the cascade of economic data with some suspicion. Federal economic data sets are almost always revised a bit as more people are surveyed and late administrative filings are compiled. The data sets often don’t mean exactly what we think they mean. For example, the employment data treats all jobs the same, whether they are 15 or 45 hours per week. Also, inflation is imperfectly measured, so the real value of anything denominated in currency will be a tad bit wrong. That said, the U.S. has the most sophisticated, apolitical and effective economic data services in the world. They just happen to be administered and reported by men, not angels.
More troublesome than the errors are the tangible difficulties in discerning a trend from these data. That is what economists do, and so we must approach the task with some humility.
At the beginning of the Great Recession, in December 2007, there were more than 26 full-time workers for each part-time employee who was looking for full-time work. By the end of the recession in June 2009 that number had shrunk to less than 15 full-time workers for each part-timer. There it has since remained. More concerning is that all of the net job growth this year has been in part-time employment. This is ominous, as I shall shortly explain.
Even more troubling is the composition of these jobs. Since the end of the recession, job growth among those with a four-year degree has topped 4.4 million workers, effectively restoring the college educated to full employment. These folks comprise about a quarter of the adult population. Job growth among those with some college, but not a four-year degree has been about 1.1 million jobs. These people are little larger share of the population than those with four-year degrees. The remaining workforce, which is just under half of adults, has seen cumulative job losses of 1.7 million workers since the end of the recession. So, all the net job growth since the end of the recession has gone to those with college degree. It ought to be clear that this is disastrous to everyone. This disaster is becoming as bad as anything that happened to us in the Great Recession.
The humility here lies in not knowing for sure why labor markets are so dreadfully bad. Part of the story, which I have told before, is due to a skills mismatch between workers and jobs. While a large share of blame goes to business uncertainty about the future, the root cause of this is not yet perfectly clear. There are some suspects: The uncertain costs of the Affordable Care Act may especially weigh on full-time employment. This would also explain fewer jobs for less skilled workers. For them health benefits are a relatively larger share of labor costs. If this is the cause, there is no end in sight to our languishing economy.