Governor Romney has set 12,000,000 new jobs within four years as his jobs creation goal, and is chiding President Obama for not being capable of achieving that.
Many prominent economists have predicted 12,000,000 new jobs (an increase over the number of people working today) as the expected rate for jobs growth during this period (2013-2017) under normal circumstances.
Those normal circumstances are that jobs keep up with population growth.
Here is the math:
If jobs grow in direct proportion to population growth of 1.01%/year then over four years that works out to 12,560,000 jobs created, or 3,140,000 jobs per year as an average. However those 12 million jobs still represent a ZERO SUM GAIN and does nothing to replace any of the jobs lost since 2007’s Great Recession. Those jobs only represent the needs of current population growth.
—–> The Math: U.S. population is 314M (3Q 2012) / 100 * 1.01 = 3.14M jobs/year … or 261,667 jobs per month are needed to keep up with population growth.
The challenge for whomever is the next president is that the U.S. productivity rate is currently 2.2% (2Q 2012), which is double the rate of population growth. Theoretically, with a ratio of 1.01:2.2% (population growth:productivity growth), the need for workers is decreasing at twice the rate of population growth.
—–> The Math: If productivity continues to increase at its current rate then mathematically we should expect jobs growth at only half the rate of population growth (261,667 jobs = 1.01% population growth per month). So if only half the number of jobs are needed to match the growth in productivity then that number works out to just 130,833 jobs per month as being the expected monthly average.
During 2012, the 2012 average monthly jobs growth rate has been 146,000 jobs per month as of October which is appropriate for what the math tells us should be norm. If that remains the case (productivity rate vs population growth) then what we are probably looking at as realistically being the expected number for jobs growth between 2013-2017 is just 6-7 million jobs, not 12 million or higher.
Things can change but math says that we are where we should be without some game changer. Where we are is that jobs are not growing to match population growth, not even close.
The chart below shows jobs growth since 1980 as a percentage of Americans having a job. Since 2001, the percentage of Americans with jobs has dropped almost every year and incrementally almost every month since 2001. The exception was a strong but short-lived growth in jobs in late 2006 and early 2007.
Here is what the chart looks like on a monthly basis since 1980: