Who Broke America’s Jobs Machine?

If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.

Many people blame the great real estate bubble of recent years. The idea here is that once a bubble pops it can destroy more real-world business activity—and jobs—than it creates as it expands. There is some truth to this. But it doesn’t explain why, even when the real estate bubble was at its most inflated, so few jobs were created compared to the tech-stock bubble of the late ’90s. Between 2000 and 2007 American businesses created only seven million jobs, before the great recession destroyed more than that. In the ’90s prior to the dot-com bust, they created more than twenty-two million jobs.

Others point to the diffusion of new technologies that reduce the number of workers needed to produce and sell manufactured products like cars and services like airline reservations. But throughout economic history, even as new technologies like the assembly line and the personal computer destroyed large numbers of jobs, they also empowered people to create new and different ones, often in greater numbers. Yet others blame foreign competition and offshoring, and point to all the jobs lost to China, India, or Mexico. Here, too, there is some truth. But U.S. governments have been liberalizing our trade laws for decades; although this has radically changed the type of jobs available to American workers—shifting vast chunks of the U.S. manufacturing sector overseas, for instance—there is little evidence that this has resulted in any lasting decline in the number of jobs in America.