Why the U.S. job market has steady growth
If you were to choose a job, what would be your priority? Compelling job profile, higher average salary, or decent work-life balance? How about all the three! Well, the U.S. job market should be able to help you as this country scores high in many of the parameters in comparison to the rest of the world. But, the most important factor is the number of job opportunities — according to a report published by CNN, there were 5.7 million job openings in May this year with unemployment rate at its lowest in the last 10 years.
What does our own research say?
Let’s take a look at what data says about the U.S. job market. JobsPikr has a ‘Popular US’ bundle that provides access to job data from close to 90 US-based company websites including job boards. We’ll showcase the analysis of the same job data to visualize the trend. Although in the last three months JobsPikr has extracted data from close to 2,90,000 job listings, we’ve taken into account the listings that have ‘job posting’ date.
Here is the time series graph showing addition of new jobs each week over the last three months:
We can see that there has been constant increase in the number of jobs posted each week and the number would be higher if all the job listings had data field pertaining to the date of listing.
So, how does the U.S. create so many jobs? Although there are many variables in the U.S. job equation, we’ll cover the major ones in this post.
The United States fosters a culture of innovation and it reflects in the fact that majority of the world’s innovative companies are based out of Silicon Valley. There is no doubt that innovation results in newer and better job creation depending on the new insights and technologies. While it can wipe-out old jobs by improving processes and efficiency, in most of the cases it can create plethora of new jobs by opening up a new market. For example, in case of Apple the innovation in smartphone not only created jobs in hardware market, it opened up a new app market which is based on software. This job required the workers to upskill themselves in order to take the advantage of the app economy. Apart from that the investment in the human genome project gave ROI of 14,000 percent in terms of economic output per dollar invested by the government, and created millions of jobs in the biotech industry which would not have possible otherwise. One more example is the investment in Defense Advanced Research Agency (DARPA) led to the rise of Internet, producing billions of dollars in economic activity, new companies, and, more importantly, tremendous job opportunities. As innovation is essential for survival of any business, job creation will be championed by companies who will be consistent and imbibe the culture of perpetual innovation over the lifetime.
The US government is propelling economic growth by pushing plans for tax cutting, limited regulations and more domestic expenditure. For example, any company that produces a product gets to keep the percentage of the production depending on the tax rate. The tax rate that gets applied on the final earning can either lead to growth of economy or decline of economy which will finally impact job creation. If the tax rate on the last income gets slashed, there is stimulus of for other financial activities such as savings, investment, new business creation, new jobs, and entrepreneurship. The new government has proposed a tax plan that would substantially cut down business taxes and sharply discount the tax levied on corporates leading to more profit channeled back into the United States. Apart for improvements in the taxation for both corporate America and citizens, the U.S. has decent trade deals with the rest of the world and ensures that the jobs get created in their country. Moreover, the government is ready to renegotiate the trade agreements to bring more jobs with better wages and boost the manufacturing industry. The U.S. government has also ensured that it is highly competitive with other nations in terms of ease of doing business. Currently, the U.S. ranks 8th in world in the index for ease of doing business and ranks 2nd when it comes to getting credit for business.
Historically, The United States has attracted immigrants of various demographics with wide range of professional aspiration — from entrepreneurs to workers. While there is no doubt that entrepreneurs create jobs, it is important to understand the impact of immigrant entrepreneurs. According to an article published on Forbes, close to 25% of entrepreneurs in America are immigrants while immigrants constitute 15% of the total population. Many of the successful companies in the United States (including Sergey Brin of Google) have foreign-born or immigrant founders. It’d be worth noting that the U.S. offers permanent immigration to people in the following case – “persons who will invest $500,000 to $1 million in a job-creating enterprise that employs at least 10 full time U.S. workers”, as mentioned in by the American Immigration Council.
Coming to job seekers, let’s note that America stands at the numero uno position when it comes to the household income and list of financially wealthy people. The average household disposable income comes close to $38,001 per annum which is more than that of Switzerland (second) and Luxembourg (third). This can also be a major factor why people are attracted towards the American dream. While immigrant workers can make the job market more competitive, we should also consider the increment in demand for services resulting from population growth. According to a report published by the National Bureau of Economic Research, each immigrant creates 1.2 local jobs for local market. This essentially means 1000 immigrants would create 1200 local jobs. Hence, the U.S. has a comprehensive immigration plan in which they allow skilled job seekers to move the country and add value to the economy.
While the U.S. has been adding new jobs at a healthy rate since the last recession (barring few months), employment still remains a major challenge. The government will have to steer the job growth via robust economic growth plans, immigration rules and truly intertwining the culture of innovation.
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