Anemic Job Growth - New Policies Needed

Doug Hoffer comments on Monthly Jobs Report:

In the latest Dept. of Labor press release, the Commissioner stated, “job growth continues on its modest growth path [but] we continue to be concerned about recent downward trends in labor force and employment."

It's good that the Commissioner has acknowledged a problem. But a longer term perspective would lead one to characterize job growth as anemic, rather than modest. And it's not a recent trend. As the graph below makes clear, private sector job growth has been significantly lower in the last three years than in the 1990s. [Note: I focus on private sector job growth because state economic development policy is not directed to and has little impact on public sector jobs.]

Since the last recession, we've gained 7,700 private sector jobs. But 4,300 simply replace those lost during the recession, so it's a net gain of only 3,400 jobs in six years (and it appears we may be heading for another recession.

And while the Department's press release makes no mention of it, many of the jobs being created are low wage. For example, of the 4,200 net new private sector jobs since August 2004, 2,600 are in "health care and social assistance". While there are many good jobs in this industry, almost 4 out of 10 are in "social assistance" and "nursing and residential care facilities". The average wages in these two sectors in 2006 were $16,888 and $25,019 respectively.

Unfortunately, Vermont is not alone as the U.S. economy is experiencing similar problems, although Vermont's performance is considerably worse (since August 2004, U.S. private sector jobs increased 5.4% while Vermont has grown only 1.7%.

The point is that Vermont's economic development policies are not working. Perhaps that's not surprising since Vermont is so small and the forces at work are so large. But if the "tools" we're using are not sufficient to overcome those forces, why don't we look for new tools? At some point we have to ask the question: What are we getting for the tens of millions we spend each year on economic development?

Isn't it time to look objectively at all of our policies and programs and determine which are providing a good return on investment and which are not? And for those that are not performing, we should consider a range of alternatives. Only then can policy makers determine how to allocate our limited resources wisely.