Employment

Benjy Sarlin notes that one GOP Presidential hopeful is being criticized by GOP economists: Tim Pawlenty drew widespread ridicule from experts across the political spectrum on Wednesday for his wildly optimistic economic plan. Pawlenty unveiled his platform at a speech in Chicago, a combination of tax reforms and budget cuts that he said would yield an explosive economic recovery. The centerpiece of his proposal was setting a goal of 5% economic growth per year for a decade. "Growing at 5% a year, rather than the current level of 1.8%, would net us millions of new jobs," he said. "Trillions of dollars in new wealth. Put us on a path to saving our entitlement programs. And balance the federal budget."But a group of former CBO directors, who are chosen by Congress to analyze the budget from a nonpartisan perspective, are lambasting the number, saying it's completely out of line with any mainstream assessment of the American economy."The trend growth rate is ...

Tim Pawlenty may be getting a lot of criticism for his claim that we can achieve 5% growth for an entire decade but John Taylor argues that this “is not some pie-in-the-sky number”. It is a real stretch, however, especially once one looks at all the assumptions that Dr. Taylor has to make to get even close to this “aspiration”. Taylor starts with the recognition that the employment to population ratio is dismally low: Currently the percentage of the working-age population (age 16 and over) that is actually working is very low at 58.4 percent. In the year 2000 it reached 64.7 percent, so that is at least a feasible number. Raising the employment-to-population ratio to 64.7 means an employment increase of 10.8 percent (64.7-58.4/58.4 = .108) or about 1 percent per year over 10 years, even without any growth of the population. Adding in about 1 percent for population growth (from Census projections), gives employment growth of 2 percent per year. I have a couple of quibbles with this e...