A recovery that's 11 million jobs short

Chart created by the Economic Policy Institute

The Department of Labor will release its monthly report on jobs tomorrow, and every indication is that it will show an improvement over the dismal numbers of May but still be well below what is needed to make a serious dent in unemployment. Expectations are for a gain of about 125,000 jobs, with more than that created by the private sector minus losses in the public sector, which has already shed more than half a million jobs in the past three years, with 430,000 of those layoffs occurring after the recession officially ended in June 2009.

As surely everyone who has followed news about the recession and its devastating aftermath knows, employment is what economists call a "lagging indicator." Nothing startling about that. As the economy starts going downhill, as measured by contraction of gross domestic product and other factors, it takes a little while for the layoffs to begin. When the economy begins improving, it takes a while for rehiring to begin.

But until the 1990 recession, the lag in job growth was just a few months. In the recovery from that recession, the one in 2001 and the 2007-09 recession, the lag has been greatly extended and, along with it, the pain. While the speed of job recovery this time around is somewhat better than after the 2001 recession, the total number of jobs lost was far greater. According to an analysis at the Economic Policy Institute by Heidi Shierholz, Ten Facts about the Recovery, at the current rate of job growth, it will take until 2021 to return to the pre-recession unemployment rate:

The economy currently has 6.9 million fewer jobs than when the recession started. But because the working-age population is naturally increasing all the time, in the three years and five months since the recession started we should have added around 4.1 million jobs to keep pace with population growth. This means the current gap in the labor market is roughly 11 million jobs. ... To close that gap within three years, we would have to add around 400,000 jobs every single month for 36 months. By comparison, over the last three months we added just 160,000 jobs per month on average. At that rate, it will take well over a decade to get back to the pre-recession unemployment rate. Two years out, this recovery is not yet producing close to the rate of jobs growth needed to dig out of the hole we are in any time soon.

That leads us to another key item among Shierholz's 10. Americans are no longer at a higher risk of being laid off, which is shown by the weekly number of claims filed for unemployment benefits. However, the share of the working-age population with a job isn't improving.

The unemployment rate, of course, has dropped somewhat: It has fallen from its peak of 10.1% in October 2009 to 9.1% in May 2011. However, an improvement in the unemployment rate is only good news if a larger share of the potential workforce actually finds work, and that is not happening?the entire improvement in the unemployment rate over that period was due to would-be workers deciding to sit out the job search altogether.

In Washington fixing the deficit still matters more than fixing unemployment. One more line item from the New Normal.  

Source: http://feeds.dailykos.com/~r/dailykos/index/~3/1CwCBORmAcQ/-A-recovery-thats-11-million-jobsshort

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