THE BLOG
03/18/2010 05:12 am ET Updated Dec 06, 2017

Hiring More People Is Not the Answer to Lowering Unemployment

Let us get something straight. People are being hired all the time. In fact close to 5% of the workforce are new every month. Our problem for the last couple of years is that more than 5% of the workforce has been losing or leaving jobs each month as well.

The following table shows last month's flows between the three categories of Employed, Unemployed and Not in the Workforce.

2009-10-15-Chart.jpg

What one can see is that in September 6.24 million people who were not employed in August were counted as having a job in September, while 7.28 million who were employed in August were counted as not having a job in September. Since September is a month with more than normal turnover, the seasonally adjusted numbers (that are what are usually reported) are smaller.

This table makes another point, since most working people have jobs for long periods of time, we must assume that the most of the workers in the 5% are in and out of the workforce often. Most jobs of this group are (very) transitory. They are in jobs that require little or no training and do not pay well. Workers in this group could have four or five jobs a year and would have no chance for advancement or qualifying for health insurance.

Reducing unemployment is desirable, but creating jobs that last is more important.