What Is A Good Jobs Number? – Riddle 3

To: Cardiff Garcia – Co-host: The Indicator, Planet Money - NPR Stacey Vanek Smith – Co-Host: The Indicator, Planet Money – NPR

With the first “Jobs Friday” for the year, even if it’s for the last one of 2019, a new riddle seems an appropriate way to start the new year and new decade. Whether this riddle is good for a laugh or not may depend not just on results but upon what you were or should have been expecting.

To begin, we should establish a common reference point or two. Some stakes in the ground are needed that both allow us to know where we are and where we are going. Perhaps it would be prudent to state an Economic version of Newton’s three Laws of Motion.

First Law of Economic Motion: An economy at rest will stay at rest, or if in motion will stay in motion, unless an external force acts to change its current state.

Second Law of Economic Motion: The change in speed or direction of an economy will be proportionate to the influence that a factor (force) has on an economy.

Third Law of Economic Motion: For every factor that influences an economy there is a equal reaction the economy has on the factors that effect it.

Note, that an economy being designated as ‘good’ is not a function of the three laws. It’s just a judgement of the ‘current’ state based on some arbitrarily defined measurements or calculations. Just as designating an economy as ‘bad’ or even ‘neutral’ requires a measured point of reference.

There are of course implications of the Three Laws of Economic Motion to changing economies or causal factors. You may not accept or agree with the Three Laws of Economic Motion, but more is required than to simply reject them. This isn’t intended as part of the riddle (which is Question 5), but it is perhaps an even more interesting riddle than that question.

Question 1: What is required to demonstrate, not just claim, that an economic policy has changed the economy?

Question 2: Does the following chart related to Jobs in the Economy indicate that any action(s) taken to improve an economy was/were: A. Positive, B. Negative, C. Neutral?

Question 3: In the chart above, where the Baseline is a linear projection of constant employment growth based on prior data, what happened?

Question 4: What number of jobs must be added to an economy just to keep it in place?

Question 5: So, when did the economy become ‘good’?

At this point it’s answer time. The answers may not be complete, since that would detract from your potential enjoyment, and it would likely require a rather longer text.

Answer 1: There must be a change in state beyond what is expected when nothing is done.

Answer 2: Overall, it seems there’s been some depression of job growth. But even that would require that the variations over time aren’t within typical numbers.

Answer 3: Very little that wasn’t just inertial job growth, or some minor decline.

Answer 4: I would hope this would be obvious, but that’s inconsistent with my expectations. I believe only a hint should be required here: Population.

Answer 5: This is fundamentally the riddle. And you need at least two things to solve it. You need to be able to apply the Three Laws of Economic Motion, and you need to cite the criteria.

What then is a Good Jobs Number? You could ask the Fed, or you could realize that it’s just not that simple. Those who claim what a good number is and why should really do a much better job of defining what makes it good, bad or indifferent. Personally, I think the economy’s OK, but its robustness is questionable. The number of vulnerabilities is large while the number and depth of strengths are not.