Wednesday, February 3, 2010

ADP Reveals Shocking Decade-Long Employment Data

Medium-sized businesses are back in hiring mode, according to ADP. That's the good news, since medium-sized businesses employ more Americans than big corporations and almost as many as small businesses. Nationally, these firms employ more than 42 million Americans, far more than large companies (17.8 million) and nearly as many as small businesses (48 million).

The bad news is that small businesses shed another 12,000 jobs and large businesses shed 19,000 in January 2010.

The really bad news is that over the last 10 years, according to ADP data, the United States actually has added no net new jobs.

In December 2000 there were 111.65 million U.S. employees working.

In January 2010 there were  108.14 million Americans working. From March 2007 to May 2008 U.S. employment was above the 115 million mark.

Overall, the economy still lost 22,000 jobs between December and January, according to the ADP report.

In May 2008 there were 115.2 million U.S. workers. That means the country must add back 7.1 million jobs to get back to where it was before the recent recession began.

One might argue that means 7.1 million U.S. families that are spending far less than they used to, on communications and all sorts of other things. But that completely understates the matter. Several hundred other million consumers have ratcheted their spending down as well.

All of that likely means several more years of slow economic growth, as consumers restructure their finances, government at all levels finds it simply cannot spend so much because the tax revenue isn't there, and the other long-term impact of unusual and unprecedented government indebtedness starts to be felt.

Some have argued that consumer behavior has permanently altered. One doesn't even have to go that far to predict a long, sluggish climb back up. Behavior now is constrained in real ways. It isn't a matter of permanently altered behavior but rather of sheer inability to behave otherwise.

The recovery has begun. The bad news is that it will be hard to see, and that there is no way to test the thesis of new consumer behavior patterns for some years, because it will take years before consumers really are free to choose.

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