Friday, March 23, 2012

Job Growth vs. Population Growth

In the following chart I take the annual nonfarm payroll growth and subtract the annual population growth.

Click to enlarge.

I offer two trend lines based on the behavior change in August 1982. Why August 1982? Through trial and error, that's seemingly the point that best allows the two trend lines to meet up in the middle. It was during the early 1980s recession and therefore offers a bit of centering balance to the chart.

This is not just a cyclical problem. It's been with us for 30 years. Keep in mind that the red trend line began its life during a severe recession. Could I have made the hurdle any lower? Think about it for a minute. If I told you that my trend line started during a recession and ends during an expansion (like this one does), then would you expect the trend line to slope down? During the next recession (whenever it appears), I expect it to slope down even more (and more closely reveal its true recession to recession slope).

If you are counting on population growth to save us, then I have even more bad news. Check out our population growth trend.

Click to enlarge.

We shouldn't need population growth to become more prosperous. Unfortunately, that would only be true if we weren't relying on an exponential debt ponzi scheme to fund our current standard of living. In other words, we feel the need to borrow from our children to have a more prosperous life today. That's the very basis of my blog's theme. It's an illusion of prosperity.

So let's sum up what these two charts are saying.

Payroll growth is slowing compared to population growth. Population growth is also slowing. That's how you end up with the following chart.

March 9, 2012
39.3 Million Missing Jobs

Click to enlarge.

So, other than an economics professor sitting in an ivory tower reciting 200+ years of American history, who in their right mind can possibly think that we can grow like we once did?

March 22, 2012
Student Loan Debt: $1 Trillion and Counting

Too much debt means too much risk for a generation of young people, many of whom are struggling in today’s economy.

What's one solution for the burden of rising tuition costs, rising food costs, rising energy costs, and high unemployment? Here's the easy one that no doubt works for some people (myself included). Simply stop having children. Be like Japan.

January 30, 2012
Japan's population faces dramatic decline

Tokyo (CNN) -- Japan's population will shrink by a staggering 30% by 2060, according to a new estimate by the country's government.

The current population will shrink from the current level of 128 million to 86.74 million, as the graying nation's aging accelerates and the birthrate continues to stay low.

Behold the power of debt.

Source Data:
St. Louis Fed: All Employees: Total nonfarm
St. Louis Fed: Total Population: All Ages including Armed Forces Overseas


Troy said...

We shouldn't need population growth to become more prosperous.

We needed population growth 1800 - ~1980 to fill in the nation and fully exploit its natural opportunities.

But since then, we're getting into the lump of labor fallacy fallacy area now.

If we're going to liquidate 8 million workers from MANEMP since 1980, we're going to have to live with a lower labor utilization I guess.

If we could figure out a way to reverse the inflation in land prices, we all could afford to live on 20-30 hrs a week. Land doesn't cost much to produce -- all of it was made thousands of years after all -- but it sure does have a high acquisition cost.

So much of our incomes have gone into bidding up the price of land, but so few people are able to see this simple dynamic -- it's really quite perplexing to me.

Multifamily rents are even worse. They're 3X what they were 20 years ago, for the exact same housing good in many cases. How does that work???

As for Japan, their 2050 population will match their 1975 population, except there will be 5X the number of old people and 1/2 the number of young.

Old people don't need anything that can't be produced domestically, so I don't see a crisis coming for them.

I do see the pain of transition coming though, as Japan's deferred taxation begins to reverse and more and more of the middle class's disposable income is taken by the tax man.

My thesis is that this reversal will hit Japan's still-expensive land values first and foremost, but I could be wrong about that, since 80% of any economy is just a long con apparently.

Stagflationary Mark said...

Here's a theory.

Live = Kick the Can
Lived = Kicked the Can

Kick the can long and prosper. - Spock

Kick the Can and Let Die - Bond Movie

Don't part with your illusions. When they are gone, you may still exist, but you have ceased to kick the can. - Mark Twain

Windows Kick the Can - Microsoft

We would like to kick the can as we once kicked the can, but history will not permit it. - John F. Kennedy

It seems to work every time, lol. Sigh.

mab said...

Unfortunately, that would only be true if we weren't relying on an exponential debt ponzi scheme to fund our current standard of living.

It is a ponzi scheme. But the rest of the world is playing the same game. So, we have the mutually assured destruction dynamic at work. Very comforting!

More can kicking is inevitable.

Stagflationary Mark said...


More can kicking is inevitable.

Well, we could just stick a Morton's fork in this economy and call it done, lol. Sigh.

It is said to originate with the collecting of taxes by John Morton, Archbishop of Canterbury in the late 15th century, who held that a man living modestly must be saving money and could therefore afford taxes, whereas if he was living extravagantly then he was obviously rich and could still afford them.

mab said...


The thing is, the Greece debt write-off ran counter to our can kicking thesis.

Makes you wonder if the other PIIGS won't seek the same kind of debt relief.

Imo, deficits do matter. They're the only thing that keeps the private debt ponzi schemes from collapsing.

The Euro system is insane. It's a private debt ponzi system that lacks the critical support of public debt. The EU is asking for trouble.

Stagflationary Mark said...


"It's a private debt ponzi system that lacks the critical support of public debt."

Fannie Mae's Long-Term Stock Chart

Quasi-critical support for the win! D'oh!

Scott said...

The popular game SimCity, allegedly a lesson in modern urban managment, has as its key goal maximizing real estate values. Rather twisted and insidious.

Stagflationary Mark said...


The key goal in Civilization is to expand exponentially until all other players are destroyed.

Isn't "civilization" wonderful? ;)