How many jobs per year must the economy produce in order to return to a historical average unemployment rate at some specified time in the future ? This is an easy question to ask and it turns out an easy question to answer. If we make the assumption that, starting today, the peak growth of the Reagan boom starts again, it turns out that unemployment gets back to "normal" sometime around 2017.

Since 1980 the American economy has been producing roughly 1.5M jobs per year. That is the rate of job creation that is necessary, again roughly, to keep pace with the growing population. This can be shown as follows. In figure 1 we plot the number of employed persons, as given by the Bureau of Labor Statistics, since 1980. The unemployment data (shown in Fig. 2) shows that the unemployment rate was roughly equal in 1980 and 2007. A linear fit to the employment number from 1980 to 2007 thus shows that at 1.5M per year (the slope of the dashed green line fit) the economy is producing sufficient jobs to maintain unemployment at a roughly steady level. Since 2007 the economy has shed about 7M jobs. The question then is: at what rate must the economy produce jobs in order to bring the unemployment level back to its historical mean at some prescribed future date ?

Without producing numbers for every possible situation, we can look at a particularly optimistic scenario. Since 1980 the greatest single year-on-year growth in jobs in America took place at the kickoff of the Reagn boom from 1983-1984. During that single year the economy added 4.2M jobs! If we assume that, beginning this year, the economy begins to produce jobs at that rate (red extrapolation line) we find that unemployment will return to "normal" some time around 2017.

Unfortunately, it is the opinion of this campaign that the policies of the Obama administration have done little to alleviate the job loss. The recent 3.1% growth in the GDP registered in the first quarter is a natural response to pouring hundreds of billions of dollars into the economy. Even this has only marginally offset the bleeding, with the climb in the number of non-government jobs in the latest report being negligible. Historically (and logically) the GDP has always jumped in response to the infusion of large quantities of borrowed money. Given that the national debt has now surpassed the GDP for the first time in history, it is natural to ask if we may not have max-ed out our national credit card.

The basic policies that are anticipated by the administration: to redouble the stimulus, increase taxes (or allow them to rise) on those making over $250,000 (inlcluding many small businesses) and continue the increase of government spending at unprecedented rates will not lead to job growth at 4.2M per year. Indeed, the opposite policies of (first and foremost) reducing spending, keeping marginal tax rates at their current level if not lower and abandoning stimulus plans which will only further undermine the stability of our currency are necessary to reverse the trend.

For more details please see my discussion of issues.