The very slow return of jobs

Jobs, Jobs, Jobs
[Via Calculated Risk]

As a reminder, the weak payroll report for January was blamed on the snow. Usually I don’t buy the weather excuses, but it did appear weather played a role this time. When the report was released, I wrote:

The 36,000 payroll jobs added was far below expectations of 150,000 jobs, however this was probably impacted by bad weather during the survey reference period. If so, there should be a strong bounce back in the February report.

That is a key reason the consensus is so high for February. Bloomberg has the consensus at 180,000, MarketWatch has 200,000, Goldman’s forecast is 200,000, and I heard ISI is at 230,000).

It will be useful to average the two months to estimate the current pace of payroll growth – especially if weather played a role in January and there is a strong bounce back in February.

And we have to remember the numbers are grim:
• There are 7.7 million fewer payroll jobs now than before the recession started in December 2007.
• Almost 14 million Americans are unemployed.
• Of those unemployed, 6.2 million have been unemployed for six months or more.
• Another 8.4 million are working part time for economic reasons,
• About 4 million more have left the labor force since the start of the recession (we can see this in the dramatic drop in the labor force participation rate),
• of those who have left the labor force, about 1 million are available for work, but are discouraged and have given up.


At this rate, it will take 5 years just to replace the 7.7 million jobs. But that does not take into account the increasing labor market as young people enter. Here is a nice graphical comparison, from last year, from the Center for Economic and Policy Research:


This is how long it would take to get back to even. As you can see, last July it was going to take 4 years. Now we are talking 5 years. So, instead of 2014 it will be 2016.

But here is the same graph including the increase in the labor market:


Last year, it was going to take until 2021 to get back to the same employment levels we had in 2007! Now we are looking more to 2023.

This all assumes that the jobs recovery rates do not change. we have to hope we see a large increase in jobs sometime soon. Otherwise we are talking 15 years just to get back to what we used to have.

That is why job creation should be number one. If we do not start to really tackle this problem now, an entire generation of workers will be lost.

The deficit won’t matter because too many people will not have any jobs.

One thought on “The very slow return of jobs

  1. As long as “small” business is hampered by not knowing what their costs will be;as long as the drilling business can’t get permits;as long as the various federal departments keep issuing regs instead of helping what they are supposedly regulating and as long as unions keep calling out the troops, jobs will be in short supply.

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