Another confident claim from our favourite retired accountant:
The private sector is not creating jobs. None at all.
That would be why unemployment is rising by 47,000 a week then would it?
GEP used data from the Office for National Statistics\’ Inter-Departmental Business Register, which records all businesses in the UK.
Researchers discovered that on average a total of 47,000 private-sector jobs are destroyed every week — equal to 2.35 million a year. But another 53,000 a week — in other words, some 2.6 million a year — are created as part of the relentless \”churn\” in the job market.
Yes, he\’s tripped over the stock and flow concept again. What we measure as unemployment is the stock of people who do not have a job. Underneath that there\’s a huge flow of people from jobs disappearing to jobs newly created (and unemployment numbers include part of that flow as well, as people claim benefits for some short period of time while moving from old to new job).
If it were really true that the private sector is creating no jobs then all of that flow out of old jobs would be added to the unemployment lines. That isn\’t of course, what is happening:
The unemployment rate for the three months to February 2010 was 8.0 per cent. The rate was up 0.1 on the quarter and it has not been higher since the three months to September 1996. The number of unemployed people increased by 43,000 over the quarter to reach 2.50 million,
Allow me to round things a little…call it 45,000 jobs destroyed a week, 45,000 added to unemployment lines in a quarter. Now we can see that there are (and while this is both govt and private sector, the private sector is the vast majority of this) 11 times as many jobs created in a quarter as there is a rise in unemployment.
It\’s as Chris Dillow has repeatedly pointed out. Recessions, these rises in unemployment, are not when no jobs are being created. Nor are they when (particularly) more people are losing their jobs. They are when the creation of new jobs lags the normal destruction of old jobs inherent in the churn of the labour market.
We can also look at this again on an annual basis. If unemployment (extending that quarterly figure) is rising by 200,000 a year and the standard job destruction is 47,000 a week (2.34 million a year) then we must in fact be having 2.1 million jobs a year being created out there in the economy.
OK, so this number is a few months out of date:
The ONS has confirmed a quarterly increase in public sector employment of over 23,000 people, to 6.1m employees.
So call it a net increase of 100,000 a year for the public sector.
This means that the private sector is still creating 2 million or so jobs a year.
Somehow I just can\’t escape this feeling that private sector job creation of 2 million a year is both quantitavely and qualitatively different from \”The private sector is not creating jobs. None at all.\”