The following question and answer segment was composed by economist Pat Choate and is the first installment in a two part series.

Bio: Economist
and author

What is a “jobs gap?”
The “jobs gap” is the difference between the number of people at work and the number of people who want a job but cannot find one.

How big is America’s jobs gap?
In March 2010, the U.S. civilian labor force had 153.9 million people. Of these, 138.9 million were at work, creating an official unemployment rate of 9.7 percent. Full employment is about 4.0 percent unemployment, reflecting the constant churns in the labor force. Thus, by the official data, the gap is 9.7 minus 4.0: that is, 5.7 percent and 8.7 million jobs. Yet, the official unemployment rate does not count “discouraged workers,” or those marginally attached to the work force, or those employed part-time
for economic reasons. When the Labor Department counts all the jobless, America had an unemployment rate of 16.7 percent in March 2010 and thus a 12.7 percent gap — 19.7 million jobs.

Who was jobless in March 2010?
• 8.0 percent of adult women workers 20 years and older;
• 10.0 percent of adult men workers 20 years and older;
• 7.5 percent of Asian workers;
• 8.8 percent of Whites workers;
• 12.6 percent of Hispanics and Latino workers;
• 16.5 percent of Black and African-American workers;
• 5.0 percent of the U.S. labor force (7 million) is working two jobs.

What is the jobless rate for 16-19 year-old workers?
The unemployment of workers 16-19 years of age is at Depression eralevels. In March 2010, their official unemployment rate was:
• 26.1 percent for all 16-19 year old workers;
• 30.1 percent for Hispanics and Latinos;
• 41.1 percent for Blacks and African Americans

How many net new jobs must America create to close
the gap by 2018?
The Labor Department projects a U.S. labor force of 167 million in 2018. America must create 28 million net new jobs by then to close the gap.

How important is the jobs issue for Americans?
All major national polls report that Americans who are 18-years and older say that “jobs and the economy” is the top issue the U.S. now faces. On a 100-point scale, the jobs issue generally gets 50 points, health care reform 17-20 points, the federal deficit 16 points and the balance is divided among several other issues.

Is the private sector producing enough new jobs to
fill the gap?
No. America had fewer private sector jobs in March 2010 than it had in March 2000 – a decline from 111 million jobs then to 107 as of now. In March 2010, twenty-seven states had fewer jobs than they did in 2000.

How important are young companies to U.S. jobs?
Companies five years old or younger created more than 60 percent of all net new jobs created in U.S. since 1980. Start-ups and young firms will directly create most of the new jobs that the U.S. creates. They merit special attention in public policy.

How important are small companies to U.S. jobs?
Companies with 500 or fewer workers, independent inventors and
universities with technology transfer programs create half or more of the disruptive technologies that produce entirely new jobs-creating industries. Firms with 500 or fewer workers employ 51 percent of all U.S. workers.

How important are big companies to U.S. jobs?
Companies with 500 or more workers employ 49 percent of the U.S. labor force. They are the major customers for small companies and the primary source of U.S. exports. Over the past two decades, many have out-sourced production and in-sourced workers. Bringing their production back to the U.S. can be a major source of new U.S. jobs.

What is different about today’s jobs gap?
America’s jobs crisis is structural in nature – not cyclical. Thus, unemployment remains high, even as the GDP is once again growing. Structural solutions – that is, changes in the structure of our economy and how we deal with foreign competition — are required if high unemployment is not to become the permanent new “norm.”

What is different about today’s global competition?
Global economic competition now is between market capitalism as found in the United States and state capitalism as found in varying degrees in China, Japan, South Korea, Taiwan and Germany. Market capitalism relies on private ownership and focuses on rules and enforcement. State capitalism relies on either state-owned or-directed ownership and focuses on outcomes. The structural differences are vital.

Pat Choate is the Director of the Manufacturing Policy Project, which is a nonprofit, nonpartisan 501(c)(3) institute. For more about the jobs gap and how to close it, go to Pat Choate’s recent books – Hot Property (Knopf, 2005), Dangerous Business (Knopf, 2008) and Saving Capitalism (Vintage, 2009). His blogs are atwww.huffingtonpost.com. And he can be reached at mfgmatters@gmail.com.
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