Sorry, ScoMo, But A Million Jobs Ain't What They Used To Be

A million seems like a big number.

In the realm of money, it means you are rich. Or does it?

Not if you are buying a home in a big city.  Or trying to pay the bills through a long and blissful retirement.  In short, whether a million is a lot of money, depends on how much you need.

The same is true of jobs.

Prime Minister Scott Morrison has been boasting that the economy created more than one million jobs since his party came to power in 2013.  That fulfilled an election promise made by Tony Abbott, his predecessor (two Prime Ministers ago).  And Mr Morrison, trying to get reelected, has pledged to do it again, and then some, in the next five years -- if he is voted back into power.

But is a million really a lot of jobs?  Again: it depends.

Total employment in Australia did indeed grow by 1.1 million new positions between 2013 and 2018 (using annual average comparisons).  But that actually marked the 10th time in Australian history that more than one million jobs were created in five years.  So it’s not actually an unusual occurrence.

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The first time was exactly 30 years ago, between 1983 and 1988: when cool kids listened to Sony Walkmans, mullets were fashionable, and leg-warmers were all the rage.  But a million jobs was a much bigger accomplishment back then: simply because there were a lot fewer workers to start with.  The initial level of employment in 1983 was just 6.3 million -- just half the 12.6 million at work today.  Adding a million jobs back then implied total employment growth over five years of 18 percent.  From 2013 to 2018, employment grew less than 10 percent.

You're hired! (Image: Getty)

So it’s obvious that the size of the population matters, when evaluating whether a certain number of jobs is impressive, or not.  Australia’s working age population -- the total pool of potential workers -- now exceeds 20 million people.  More important, it’s growing quickly, by both historical and international standards.  Population growth, now driven mostly by immigration, has been averaging almost 1.7 percent per year over the past decade, faster than any time since the 1960s.

Because of our large, rapidly growing population, the economy must now create more than one million new jobs every five years -- just to keep pace with the Australians who need them.  In that light, the Prime Minister has made a virtue out of a necessity: the jobs created since 2013 were absolutely necessary, given the size and growth of our population.  Should the whole nation really be thankful that we got them?

Thanks? (Image: Getty)

There’s another big problem with the million-jobs celebration.  Almost half of the jobs created since 2013 are part-time positions.  Most of those are casual jobs, with insecure hours, and wages well below average.  So we can’t focus only on the number of jobs created, without also considering what kind of jobs they are.

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Because of the disproportionate growth of part-time work, part-timers now make up almost one in three employed Australians -- a record high.  In fact, we have the third-highest rate of part-time work in the industrialised world(behind only Netherlands and Switzerland).  Hence the average hours worked by each employed person in a week has fallen substantially, to just 31.5 hours per week over the last five years.  For millions of Australians, that’s not enough: they need more hours, and more regular schedules.  This problem of “underemployment” -- people employed a few hours, but less than they want to work -- has never been worse.

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If creating a million jobs over the last five years was really a sign of an economic boom, as the government claims, labour market conditions would feel very different.  In a true employment boom, workers can afford to be choosier in what jobs they accept.  They can hold out for permanent positions, or full-time jobs, or jobs with better entitlements.  Most obviously, they can demand higher wages.  All that happened during previous hiring booms –- like the upswing of the mid-1980s, or the resource boom of the 2000s.

Mm, nah. I'll wait til I find a vintage. (Image: Getty)

But none of those things are happening in Australia’s labour market right now.  To the contrary, the average quality of work is falling: more part-time, more casual, more precarious self-employment, more reliance on the minimum conditions of the Modern Awards.  And wages haven’t grown this slowly since the Great Depression.  By most measures, real wages (adjusted for consumer prices) have declined over the last five years.  That’s more typical of a severe recession, than a supposed jobs boom.  The inadequate quantity of work, allows employers to drive down the quality of jobs -- and still get dozens of applications from desperate workers.

In sum, the creation of a million jobs over the last five years is no reason to pop the champagne corks.  To the contrary, it was a mediocre performance –- relative to past history, and relative to the number of Australians who need work.

Total work performed (measured in hours) didn’t even keep up with the growth of the working age population.  And the average quality and compensation of jobs for those who have them have clearly deteriorated.

Rather than obsessing over any particular number of jobs, we need a jobs strategy that addresses the complete set of challenges facing workers in Australia today.  Yes, we definitely need more work.  But we need better work, too.  We need to lift working conditions, enforce minimum legal standards, and support wage growth.  With the combination of abundant quantity, and good quality, workers would truly have reason to celebrate.