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america's dynamic workforce: 2008 |
After 52 consecutive months of steady job growth, payroll
employment declined in January 2008 and in the succeeding months through June
(the latest data as of this writing). The slowing of job growth in 2007 and the
declines in 2008 reflected the cumulative economic drag of events in the housing
and credit markets and the effects of escalating energy costs. Despite the
reversals in job growth, real GDP growth remained slightly positive at a 1.0
percent annual rate in the first quarter. Unemployment rates remained close to
5.0 percent in early 2008, increasing to 5.5 percent in May and remaining at 5.5
percent in June. Still, the 5.5 percent unemployment rate in May and June was
below the long-run average.
Some observers of the economy in late 2007 and in 2008
suggested that the economy was in recession, but the four indicators
traditionally relied upon by the Business Cycle Dating Committee of National
Bureau of Economic Research—economists who maintain the accepted record of
business cycle peaks and troughs—were not clear on the question in the first
half of 2008. While real sales of manufacturers, wholesalers, and retailers
were down to a degree that would indicate the beginning of a recession, real
personal income less transfer payments were essentially stable. The declines in
payroll jobs and industrial production were less pronounced than the declines
typical of past recessions.
The growing importance of global trade to the American economy
and to American workers may have been a factor in the uncertain economic
indicators. Strong exports helped to offset the declines in factory output and
employment associated with the contraction of the housing market and the sharp
decline in U.S. motor vehicle sales.
Since employment began recovering in mid-2003 from the effects
of the 2001 recession, the economy had tallied cumulative job gains of nearly
8.3 million through December 2007. The job losses in the first half of 2008
totaled 438,000, leaving total employment 0.3 percent below the December 2007
peak of 138.1 million nonfarm payroll jobs and 5.1 million above the February
2001 pre-recession peak.
The American economy and labor market are fundamentally strong,
despite the setbacks brought on by recent events, and that strength is reflected
in its resilience and ability to withstand such extraordinary challenges.
Many economists believe that the strength and resilience of the
economy is the result of the flexibility of its labor markets, which enable
employers and employees to respond rapidly to new challenges and opportunities
and quickly to implement productivity-enhancing innovation. The result of such
flexibility is an environment in which new jobs typically are being created
faster than obsolete jobs are being eliminated. This provides the American
worker with an important kind of employment security: the assurance that even
if an existing job is lost to economic challenge and change, new opportunities
will be available. Thus, labor market flexibility creates a market-oriented
economic safety net.
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