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  • Planet Money: The German Approach to Job Growth

    Unemployment in Germany is now at about 6 percent. That seems awfully low in today's global economic climate, but it seems high to Germans. And still, it took some painful maneuvering to get it that low. Planet Money took a trip over to Germany to learn more about the nation's ten year push to transform its labor market. That push helped the once stagnant manufacturing get going again, and in the process to produce more jobs. Take a listen (skip ahead to 02:30 for the story on Germany's unemployment):

  • Kaufman Foundation Report: Small Businesses 'Starting Smaller, Staying Smaller'

    No matter what the prevailing discussion is in Washington, job creation remains perhaps the biggest challenge for policymakers. And many of the most ardent small business supporters argue that their sector is the real engine of job creation in the US. So jump-starting that engine would certainly be welcome. But it may be that small businesses started to change in size before the recession. That is, that they became smaller and had fewer employees. A new Kaufman Foundation report highlights this issue, and makes the case that a boost in small business job creation is highly dependent on the number of small businesses, and not so much on current small businesses hiring more people. Recent Census Bureau research has pointed to one factor that is contributing to this slowdown in job creation—shrinking job creation in startups. As shown in Figure 1, startups created an average of 3.5 percent of total U.S. jobs annually in the 1980s, but in the 2000s contributed only 2.6 percent of total U.S. jobs. While diminished in number, these jobs still were the difference between positive and negative overall net job growth in the United States. Media and academic commentators who bemoan America’s unusually slow rate of job creation after the 2007–2009 recession are missing what we believe is a longer-term trend that began earlier in the decade and might best be called a slow jobs “leak.” In the pages that follow, we draw upon newly available data to track businesses over time and dig deeper into the health of U.S. startups. We examine young companies’ size at birth, jobs created, and survival patterns to draw inferences about the health of emerging companies in the United States. The patterns we find among young businesses show that recent U.S. startups are performing much worse than prior cohorts in terms of job creation. Conventional wisdom about job growth tends to focus solely on the jobs that are being created at existing (typically big) companies. But as a wealth of recent research has shown,6 new businesses are vital contributors to a healthy jobs market. Indeed, we know that, until the Great Recession, new firms in the United States generated on average about 3 million new jobs every year. While these firms typically follow a quick up-or-out pattern of success or failure, our analysis highlights for further scrutiny of some additional and, we believe, significant facts about the jobs actually created by new businesses. Read Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation here .

  • Unemployment and its Political Impact

    Ross Douthat references the below chart in his New York Times column today: That's the chart put together by Obama Administration key advisers Christine Romer and Jared Bernstein during the push for the Stimulus Bill. Douthat refers to it as an "unfortunate chart:" The first line — the hopeful line, the one that was used to sell $800 billion worth of stimulus — showed the rate of joblessness peaking this fall at 8 percent, and dropping swiftly thereafter. The second line — the no-stimulus scenario — showed unemployment peaking at 9 percent, holding there across 2010, and then declining in 2011 and 2012. Now reality has produced numbers of its own. In every month since May, the unemployment rate has been roughly a percentage point higher than the chart’s grimmer, stimulus-free scenario. This October, when Obama’s advisers predicted that unemployment would stand at 8 percent with the stimulus and just under 9 percent without it, the actual jobless rate leaped to 10.4 percent. This dire figure isn’t Barack Obama’s fault. Even in an age of near-trillion-dollar spending sprees, the president of the United States has only limited influence over the unemployment numbers. But the White House spent the winter pretending otherwise. The stimulus bill was framed and sold primarily as a jobs bill, and the Obama administration placed a substantial bet on the promise that the unemployment rate would start dropping before 2010 arrived. The rest of Douthat's piece focuses on the political rather than the economic landscape. But if one thing is clear after these last 14 months, it is that you can not separate the two. So if Douthat is right, there may not be a lot of political capital to spend on some of the proposals floating about for Washington to tackle the unemployment problem. But that doesn't mean they aren't worth exploring, debating, considering, shooting down (circle one) here. Douthat's NYT opinion page neighbor Paul Krugman , for instance, put forward the idea of adopting "European-style employment policies" like job sharing programs . And the Roosevelt Institute is running a series of "big ideas" from economists and historians for the next two weeks. For example, L. Randall Wray , economics professor at University of Missouri-Kansas City, proposes a "New Deal-style jobs program." Read his idea here .

  • Economists Continue Optimistic Streak in WSJ Forecasting Survey; Also Think the Government Should Not Have Let Lehman Collapse

    Most economists surveyed for the Wall Street Journal 's monthly forecast see a net job increase coming over the course of the next 12 months. The Journal's Phil Izzo points out that this is the first time in over a year that they have projected job growth. As a group, the economists still expect unemployment to top 10%--so that job growth is going to take a little while and things are going to get worse in the labor market before they get better. The survey shows relative optimism for growth in the coming months, with a prediction of 3% growth in the current quarter. Here's a look at the GDP projections over the course of the recession: Click here for interactive versions of the Journal's helpful graphics and charts associated with the forecasting survey. Given that we are at the one-year anniversary of the collapse of Lehman Brothers, one of the more interesting questions on the latest forecasting survey was whether the government should have saved the investment banking giant. Most of the economists who responded to that question thought the government made a mistake. Kelly Evans and Phil Izzo discuss that and other aspects of the survey in this video: Read the accompanying article on the survey here .