- The Washington Times - Saturday, January 8, 2005

The year-end employment report, which the Labor Department issued Friday, revealed that nonfarm payrolls increased by 157,000 jobs in December. That level of monthly job creation approximates what most economists estimate is required to accommodate the nation’s growing population. Thus, the unemployment rate, which is derived from the separate household survey, remained unchanged at 5.4 percent. With the release of the December report, now would be a good time to review how the labor market changed during 2004 and over the past four years:

m During 2004, more than 2.2 million nonfarm payroll jobs were created. That robust job expansion followed three annual declines: nearly 1.8 million in 2001, 563,000 in 2002 and 61,000 in 2003. Prior to a revision that will be formalized in next month’s report, which will add nearly 250,000 jobs to the 2003-04 numbers, the December 2004 payrolls totaled 132.266 million jobs. That number was 175,000 below the level four years earlier in December 2000. Breaking down the jobs picture between the public and private sectors reveals that 1.1 million jobs have been lost in the private sector since December 2000. A gain of more than 900,000 government jobs during the same four-year period compensated for nearly 85 percent of private-sector job losses, resulting in the net, pre-revision figure of 175,000 lost jobs.

m According to the Labor Department’s more volatile household survey, which is based on 60,000 monthly interviews with workers and non-workers, employment increased by 1.75 million in 2004. That jump followed increases of 2 million during 2003 and 350,000 in 2002. The household survey reflected nearly 1.6 million lost jobs during 2001. So, during the 2001-04 period, the household survey showed a net increase in employment of more than 2.5 million jobs.

m In terms of employment, how does the latest four-year period compare with previous presidential terms? The payroll survey dates to 1939. From 1941 through 2000, no presidential four-year period yielded a net loss of jobs. During the 10 four-year periods from 1961 through 2000, nonfarm payrolls increased an average of 9.35 percent. The current official preliminary figure of 175,000 lost jobs (2001-04) translates into an employment decline of 0.13 percent. For comparison purposes, since 1960, the number of nonfarm payroll jobs created during each four-year presidential cycle and the resulting rate of job growth are as follows: 1961-64 Kennedy-Johnson administration (5.7 million jobs, 10.6 percent job growth); 1965-1968 Johnson (9.8 million jobs, 16.5 percent); 1969-72 Nixon (6 million jobs, 8.7 percent); 1973-76 Nixon-Ford (5.2 million jobs, 6.9 percent); 1977-80 Carter (10.5 million jobs, 11.5 percent); 1981-84 Reagan (5.2 million jobs, 5.7 percent); 1985-88 Reagan (10.8 million jobs, 11.2 percent); 1989-92 George H.W. Bush (2.5 million jobs, 2.4 percent); 1993-96 Clinton (11.6 million jobs, 10.6 percent); 1997-2000 Clinton (11.4 million jobs, 9.5 percent).

The household survey, which dates to 1948, shows comparable results. The rate of job growth from 2001 through 2004, while positive at 1.8 percent, nonetheless represents the slowest net job expansion of any presidential four-year period for which household data are available. The average employment growth rate for the 14 four-year presidential-term cycles since 1948 is nearly 6.4 percent. The highest jobs growth rate was achieved during the Carter administration (1977-80). In absolute terms, the most jobs were created during the second Reagan administration.

m A more detailed review of 2001-04 activity reveals that the net loss of 175,000 jobs represents the difference between 2.542 million jobs lost in goods-producing industries and 2.367 million jobs gained in service-providing industries, including those 918,000 new government jobs. Manufacturing industries experienced a net loss of nearly 2.8 million jobs since December 2000. More than two-thirds of those jobs related to the production of durable goods (autos, appliances and other products expected to last three years or longer). As a percentage of total employment, manufacturing jobs declined from 13 percent in December 2000 to 10.9 percent last month.

m In December 2000, when the unemployment rate was 3.9 percent, the labor force had 5.63 million unemployed workers. Today, when the unemployment rate is 5.4 percent, there are 8.05 million unemployed workers.

The White House recently released its economic forecast for 2005. It projects job growth of about 175,000 per month, which compares to an average of 186,000 jobs created per month during 2004.



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