Post peak employment theory

Definition or "Post Peak Employment Theory of the United States Economy" The macroeconomic theory that United States domestic, non-farm private sector employment peaked in December of 2007 at 115,783,000 private sector jobs. This theory postulates that job losses in the United States economy beginning in 2008 represent a unprecedented departure from the historic post World-War II business cycle in the United State, where periods of jobs losses are seceded by periods of job growth that results in total employment numbers in excess of peak employment during the previous business cycle.
Analytical BasisThe theory's analytic framework is based upon four economic and demographic conditions that are unique to the current period of employment contraction.
1). The highly anomalous rate of United States private sector job losses when compared with the long-term leveling of the employment peaks and troughs in the post World War II United States economy. As of June 2009, total private US employment stood at 109,138,00. In a period of 18 months the private sector of the US economy lost 6,645,000 jobs. Since 1940 there have been 12 periods of negative annualized percent change in total private employment. An annualized rate of -5.1 percent has only been reached in 1958, 1949, and 1945.
2). Lack of Solvency & High Debt Levels: The economic and employment downturn starting in 2008 is occurring in a fiscal environment that is more debt laden than any point in the post World War II United States economy. Household and consumer consumer debt levels going into the current period of employment contraction represent a significant impediment to ability of credit market facilities and capital investment to spur employment growth. Historic lows in United States personal saving rates and record current account deficits are contributing factors in the economic drag effect of these debt levels. In the long-term, insolvencies of United States federal entitlement programs such as Medicare and Social Security will continue to hamper any economic recovery at a rate necessary to create substantive employment gains.
3). Industry Concentration of Employment Losses & Global Competition: The concentration of employment losses in certain industries, particularly manufacturing, in conjunction with the rise of foreign competition in these industries has resulted in a growing recognition among economists that many United States job losses in the manufacturing sector will not return to domestic production in any economic recovery scenario. Previous periods of employment losses have been followed by the creation of new and different jobs in emerging sectors of the United States economy. There are no identifiable, new and emerging economic sectors that are compatible with existing United States labor market skill-sets to augment the decline of United States manufacturing in the foreseeable future.
4). Labor Force Maximization & United States Demography The final factor considered by the post peak employment theory is that current period of employment losses are coupled with a civilian labor force that is increasing at the lowest rates since 1980. (See graph) Additional labor force capacity is more limited than previous points in the United States economy due to a current labor force that is more diverse and broad than at previous periods. In the long-term, a civilian population that is older than at any point in United States history, and continues to age rapidly, does not bode for a substantial increase in the available pool of labor that would be required to reach private employment rates in excess of 116 million.
History: The Post Peak Economic Employment Theory was first postulated in March of 2009 by Mr. Will Hammerquist a former Policy Advisory to Montana Governor Brian Schweitzer and conservationist living in Northwest, Montana. Significant input was received through the work of the commons and credit is shared equally among all participants who add substantive facts and economic rational in support of this theory.
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