EPI Snapshot August 3, 2005.
The private sector has 1.2 million fewer non-defense-related jobs today than it had four years ago. Only as a result of increases in government spending over the past four years, mostly on defense, does the private sector have more jobs now than it did before the recession.
Including defense-related jobs, by the end of the fiscal year the private sector is likely to have about 170,000 more jobs than four years ago.2 If private-sector jobs continue to grow at their recent pace through fiscal year 2005, the private sector will have 111.4 million jobs compared to 111.2 million in fiscal year 2001
Defense spending gave its largest single-year boost to private-sector jobs in the fiscal year that ended in September 2004. In that year alone, defense spending directly generated almost half a million jobs (495,000). The multiplier effect from that spending no doubt contributed to the other 434,000 jobs added in the private sector that year. By contrast, in this fiscal year, additional defense spending is supporting only 70,000 more jobs, a small fraction of the 2 million private-sector jobs being added this year.
At the current pace of job creation, it will be another five or six months before non-defense-related jobs recover to the level of four years ago.
The Government suddenly finds a lot more Private Sector Jobs for May, June, and July. Check the dates of publication.
Why are companies seeking higher profit margins?
Be sure to also attend the Brad DeLong link, and read the entirety of Brad's Post. The first Question is about Oil industry Profits under higher crude oil pricing, and Brad gives an interesting evaluation.
Tyler Cowen makes his own evaluation of the theories:
I will classify myself as 60% a finance economist, 5% a Galbraithian, 20% for "breach of trust," 5% to the Volcker disinflation, and 10% I will assign to "cultural change." The advent of information technology matters as well, but arguably this falls under "finance economist."
This Author dismisses the claims of the finance economists: The Managers have always been in Charge, ever since the days of the Robber-Barons. Managers most resemble Carny Schills, taking the Rubes (Stockholders) for everything they could get; whether by selling them worthless Stock, shorting their Dividends, or simply paying themselves all the Profits as Salary. Government alteration of Accounting rules or Law hold equally little significance to this Author, as only "Nuts and bolts" prattle which does not bother the real thieves. The Volcher disinflation was of vast importance in loss of Labor Power, but Shareholders did not find themselves the Kings of the Economy. I agree with Tyler that cultural change making about 10% of the difference, this change being the vast increase in Households holding Stock. The real culprit was indeed breach of trust, in that one group of sharks threw out another of predators, and raped the Corporate concerns--Worker, Shareholder, and previous Management. lgl