86k New Jobs Need To Be Added Every Month To Hold Unemployment Rate Steady In 2010: Asha Bangalore

Exactly how many jobs will President Obama's new economic initiatives have to create to stabilize the economy?

In a research piece published yesterday, Asha Bangalore of Northern Trust, a Chicago-based financial services firm, predicted that the economy will need to add about 86,000 jobs per month next year to forestall growth in the unemployment rate. (Hat tip to Business Insider.)

Yikes. For some context, U.S. employers lost 11,000 jobs last month, according to the most recent government data.

The logic behind Bangalore's calculation is simple: the number of new people entering the job market would need to correspond to the rate of increase in employment. Over the past 20 years, population growth has led to an average annual increase in the size of the labor force of 1.2%. If 2010 growth is assumed to hold close to the historical average, almost 140,000 new jobs would need to be added every month next year in order for the two to balance. Bangalore explains:

"Based on the average growth of the labor force in the last 20 years, it appears that roughly 140,000 jobs have to be created each month in 2010 to meet the increase in the labor force. We computed this number by using the level of employment in the household survey for November 2009 (138.502 million) as the starting point and raised the reading by 1.2% (growth of the labor force). [Monthly increase in employment = 138.502 * 1.012=140.164, (140.164-138.502)/12 = 138,502 jobs per month]."

But because the labor force has historically expanded at a slower rate in the first year out of an economic downturn, Bangalore anticipates a lower-than-average growth rate in 2010, which brought his jobs-needed estimate down.

Read the full report here.

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Comments

[invest in jobs]

11:35 AM on 12/13/2009

No more bailouts

hat tip to : http://financeopinionss.blogspot.com/

the fraud ponzi-pyramid markets being bubbled up by Bernanke's Viagranomics. the house of cards will continue to fail despite the recent visual morphine and Bernanke's wizardry behind the Fed curtain.

[davidwayneosedach]

12:48 PM on 12/10/2009

Has everyone forgotten the 3.5 million new jobs Obama promised? We know Obama has.

[sheilaofmiami]

11:59 AM on 12/10/2009

I will stick with my own one person business model for the foreseeable future.

My sons I worry for. The older one has slapped ice cream for a few summers now, I can hope he can get back in for one more. The younger one is still out of luck. He has no usable work experience to speak of and has an unacceptable attitude. He needs a job, but won't be finding one for some time. I worry most for him.

I plan to keep them in the educational system as long as possible.

[ddanimal]

11:42 AM on 12/10/2009

maybe this link will work:
http://www.bearishnews.com/wp-content/uploads/2009/08/total-debt-gdp.jpg

[ddanimal]

11:37 AM on 12/10/2009

Try this:

http://2.bp.blogspot.com/_nSTO-vZpSgc/ScfNYcSLnMI/AAAAAAAAFwk/nf2WEo87pWA/s1600-h/Total+Credit+Market+Debt+vs.+GDP.png

[ddanimal]

11:36 AM on 12/10/2009

The economy is not adding jobs and it will not add jobs for quite a while.

the US economy headed headed for Great Depression 2.0. There is too much debt in teh system (over 350% of GDP, or $53 trillion). Obamas economic "plan" is to allow banks to lie about their lossses (accounting fraud), put taxpayers on the hook for their losses, and try to force the debt even higher.

Its a ridiculous plan that is doomed to failure, just like the spending by the Hoover admin in 1930-1933. They spent huge amounts of money trying to revive the economy, but it didnt work. Why? because debt was being liquidated and there was too much debt for the economy to support (about 200% of GDP at the time).

All this "financial innovation" allowed the banks to jack the debt levels even hjigher than they were at the start of GD 1. In other words, with better shovels, the bankers were able to dig for us a deeper grave.

Ayone expecting a recovery here does not understand the fundamental problem: too much debt in the economy.

You will understand once you see this chart:

http://2.bp.blogspot.com/_nSTO-vZpSgc/ScfNYcSLnMI/AAAAAAAAFwk/nf2WEo87pWA/s400/Total+Credit+Market+Debt+vs.+GDP.png

[Hank10303]

11:14 AM on 12/10/2009

What I find so puzzling is when we consider the alternatives from last years election who among all the contenders could have handled two wars; a global financial melt down, inflation, health care crisis, climate change, government corruption, infectious desease crisis (swinflue), nuclear disarmament, salvage international relationships and all while under attack with misrepresentation of the facts, intents and purpose of their leadership as well as lying and direct personal attacks. Now adding to the list as a result of the melt down the shock wave of unemployment. Who else could have qualified based solely on demonstrated skills to date. The job has required a top level muti-tasker of unprecedented administrative, management and people skills. And yet, we have been fortunate to have found such a person and instead of being supportive as things gradually get better and appreciating it, we as a people seem to expect the illogical and more than human from a very competent man. Puzzling in the least; disturbing at best.

[ddanimal]

11:32 AM on 12/10/2009

You dont understand the criticism.

Obama is weasting our money by giving it to the banks, and he has an economic team consisting of ONLY wall street insiders: Summers, Rubin, Geithner. All they care about is giving golden parachutes to the pigmen bankers who caused the problem in the first place.

And now Obama is opposed to Glass Steagall and other common sense reforms, because Obamas buddy bankers will not be able to make as much money.

Obama is preserving too big to fail, and he it attempting to establish a permanent bailout structure, so even future losses by the banks are paid for by taxpayers. Bankers, of course, get to keep their profits when they win.

Heads bankers win, tails you lose.

[mkenn]

11:04 AM on 12/10/2009

What can I say?... http://www.youtube.com/watch?v=uBRZw5kd474 ...actually this song says it all for me.

[GerryS]

11:48 AM on 12/10/2009

nice-

;-)

[FoonTheElder]

10:20 AM on 12/10/2009

Well seeing as we haven't added that many jobs each month for most of this decade, I guess they will have to continue to keep eliminating people from the work force statistics to make the numbers look better.

[Papa Swamp]

10:40 AM on 12/10/2009

That is exactly how they do it! Spot on!

[LittleMittens]

06:43 AM on 12/10/2009

End both wars = save this country. Honor the soldiers = bring them home

[allwrite]

06:30 AM on 12/10/2009

The private sector neither thinks nor cares about the social and economic consequences of shipping jobs overseas. Ship a job overseas, assume the affected worker will transition to an alternate job with which to earn wages to buy products manufactured overseas. But look hard for that alternate job and you will find it too went overseas. This is a system that will ultimately produce masses of homeless people.

[Papa Swamp]

09:44 AM on 12/10/2009

Its the US govt policies causing the jobs to go overseas.

US companies cannot compete with foreign companies due to other country's policy such as:
-Lower Corporate taxes (US is second highest in world)
-No unions/cheap wages/low to no benefits (labor being the most costly to companies)
-No capital gains tax
-little to no environmental regulation
-Tariffs on incoming US goods.

[FoonTheElder]

10:27 AM on 12/10/2009

The U.S. has sponsored the race to the bottom of the wage scale and intentionally destroyed its employment base so that the fortunate few at the top could be big winners. That was the whole idea behind Reaganomics. A few people win big and everyone else loses.

The U.S. corporate taxes might have a higher rate, but the amounts actually paid are in line with the rest of the world, due to massive loopholes in transfer pricing and offshore entities that multi-nationals readily take advantage of.

The corporate run U.S. government has selectively decided which industries they will protect, like agriculture and government protected military industries. They have also decided that manufacturing had too many union members, who did not support their right wing politics and that they had to go. So we now have formerly union industries, like meat packing, that have been replaced by low wage immigrant labor, or the auto industries, which have been replaced by foreign owned non-union plants in the south.

[madisonhack]

06:15 AM on 12/10/2009

When you actually count the people that lost work early in the recession and whose benefits have dried up, people that are just now entering the job market, and people that were "chronically" unemployed before the official Recession began, the real unemployment is closer to 18-20%.

If I were a graduating student right now, I'd set my sights on yet another graduate or post graduate degree, get Dad & Mom to claim me as a dependent so they could enjoy the tax break, and then plan to stay in school until this storm blows over.

I'd major in something very 21 Century.

And just in case, I'd study some Chinese.

[batmancw]

09:36 AM on 12/10/2009

AND unless they're factored into the "discouraged job searchers" portion of U-6, and i don't see how they could be, NO unemployment figures are including those who WERE self-employed until their business dried up or went under because they're not eligible to collect or file for unemployment. I've seen SO many small businesses go under here in Atlanta that I gotta' think the real unemployment rate would be another 2-4% higher IF there were a way to factor the Owners of those businesses into it. It's Very Discouraging to see these numbers.

[ibsteve2u]

04:12 AM on 12/10/2009

Oh, not to worry.

Our oh-so-patriotic wealthy and their corporations will ignore the fact that costs associated with offshore "human resources" are artificially 1/10th of ours - and the costs of offshore environmental regulation are artificially non-existent - and choose to build us a whole lot of new factories and service centers with one of their existing or proposed tax cuts, rather than using them to build new factories and service centers offshore to take more of our jobs.

You know, out of loyalty to America and our people?

Just as they haven't in the past?

[Winston120]

02:19 AM on 12/10/2009

86K is low; about 130K new people enter the job market each month. The new entries that can't find work are not counted, same as the people that lose their benefits.

Welcome to the third world, folks.

Obama: enjoy your Nobel and many date nites in 2010. The party ends Jan 20, 2013.

[Tom95134]

03:43 AM on 12/10/2009

I think even 130,000 new jobs is low.

Of course if you reduce the number of H-1B visas that are granted it would help the jobs situation. There are people who are well qualified to fill jobs that are going to H-1B visa holders because they will work at much lower pay, the company doesn't have to provide benefits, and when you move a project you simply terminate the contract (no pesky labor laws to contend with).

And then there is the situation where job-shops obtain a number of H-1B visas, fill them with high -tech people from other countries, and shuttle them from company to company to fill short term demand. There is severe abuse of the H-1B program but Congress is afraid to look into it because it will upset all those companies that depend on the lower labor costs associated with using H-1B workers.

[DebtNavigation]

11:17 PM on 12/09/2009

Defining away unemployment by shifting workers into the discouraged bucket is a disingenuous way of preventing Bonus Army-type marches on Washington. If you can show numbers that don't look that bad, everyone believes their problem is isolated, or at least shared with too few others to join with in a movement.

2010 is going to be rougher than the last two years, folks.

[batmancw]

09:43 AM on 12/10/2009

Yes, 2010-2012 or even longer is going to be rough.