Sunday, June 9, 2013

What If We Had Created One Million Jobs Last Month?

When the US jobs report came out Friday, the big talk was not the mediocre US jobs report of 175,000 jobs but the Canadian jobs report of 95,000. Why?

Rick Santelli tells us why. The CNBC video can be seen here.

But everybody is going bonkers on the trading floor. They haven't stopped talking about the report. Not the US report, the Canadian jobs report. That's really the talk of the town. I'll tell you why.

Canada has 34 million people. So anything we deal with regarding Canada, and we've been down this road before, you have to multiply by ten to make it an apples and apples equivalent for the US. So what happened today? Well, they were going to look for 15,000 jobs.
What did they end up with? They ended up with 95,000 jobs and unemployment rate of 7.1%. So to make it apples to apples, 95,000 becomes 950,000. I believe in the Reagan administration we had a million job creation in one month.

 Why does this matter? Well Canada has a population about equal to the state of California and roughly one tenth that of the US. His point was you can make an apples to apple comparison between the US and Canada simply by adding a zero to Canada's job number to compare it to the US' job number. And that Equivalent would be close to one million jobs created in the US.

Is that even possible? Well, I've point in a previous post, What A Real  Recovery Looks Like Part II, that in September,1983the economy added 1,114,000 jobs in a single month! Back then the population of the US was 233 million. That compares with a current population estimated by the US Census Bureau of 315 million today. So the 1983 number was even larger as a percent of the workforce then than if it occurred today. In fact, since the population is roughly 50% higher we might extrapolate that the workforce is also 50%, especially given that Americans are working longer even as the average age of the population grows older. So a true apple to apples comparison to today might be around 1,671,000 jobs to be equivalent to 1983's feat. Now that's something to think about.

As I had mention in that previous post, these two administration took two remarkably different paths to bring back economic growth. One clearly has worked while another clearly is not bringing about the results we would like to see. Once again, this is an economic blog, not a political blog. I am simply making a comparison of the two recoveries. As Americans, we should want to see economic growth increase and we should be able to look honestly about what has worked and what has not. Canada is certainly doing something right that we are not doing today.

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