Macroeconomic news often talks about “job creation”, “job destruction” and “net jobs creation” to describe the state of the labor market. The “jobs” metric always seemed a little odd to me, but I think it makes some sense as a short term macroeconomic indicator. As a long term indicator, it seems completely meaningless.
As I understand the metrics, jobs created means the number of positions offered by firms, while jobs destroyed means the number of people discharged from their jobs. In the short run, a worsening economy will generally lead to losses of employment, meaning that “net jobs” will be negative; an improving economy will lead to positive “net jobs” in the short run.
In the long run, however, total employment should be determined by supply and demand, and largely independent of the state of the economy, because while pay may vary with the state of the economy, almost everyone needs to work no matter what the state of the economy is, so the quantity of laborers (the employment rate) supplied should be mostly constant.
That’s why this article by David Leonhardt which tries to analyze the long term trend in job creation and destruction is confusing to me
The biggest problem with the job market isn’t the jobs that are being eliminated, shipped overseas or filled by temporary workers. The biggest problem is on the other end of the equation. There are far fewer jobs being created by new or expanding companies than there were throughout the 1990s.
But whatever the benefits of the long-term trend, we’re still left with an economy that simply is not generating enough jobs. Economists don’t completely understand why, but the pattern is pretty stark.
The labor market could be good for workers or it could be bad for workers; I don’t follow macroeconomic statistics closely, so I don’t have an informed opinion, but I don’t think that job creation and destruction is a useful metric for evaluating the long run rewards to workers.