The Lost Decade for Jobs?

Via Mark Thoma, Michael Mandel offers this chart:

He comments, “May 1999 and May 2009, employment in the private sector sector only rose by 1.1%, by far the lowest 10-year increase in the post-depression period.”

And also this chart:

He observes that “the private sector includes health care, social assistance, and education, all areas which receive a lot of government support” so basically all the job growth has been public or quasi-public in nature.

Mandel finds this all very alarming. I’m not so sure. The sectoral composition of the labor force is bound to shift over time. For a good long while, the foundation of the American economy was agriculture—widespread landownership, homesteads, etc. Then for a while employment in the agricultural sector plummeted. Alarming! But that’s just how it goes, our agricultural sector found ways to do more with less labor, so the jobs shifted into other sectors. What should worry us is the evidence that we don’t get great bang for the buck in the health and education sectors. But we do have proposals on the table that should improve the performance of the health sector, and there’s evidence that primary and secondary schools are getting better since No Child Left Behind. It’s important to get the job done, legislatively, on health and to go further on education—quality pre-K, continued improvements in K-12, getting colleges to compete more on the basis of adding value and not just selection and screening.

But I think these basic trends will continue and we’ll see bigger and bigger government in decades to come.