After Friday’s report that the nation had added 217,000 jobs in May, it was widely reported that we had finally recovered all the jobs lost from the Great Recession. That downturn officially ended in June 2009. Unfortunately, this is not true. The labor force has grown since the collapse began in 2007, so we’re nowhere near making up the damage in the labor market.
The Hamilton Project tracks the reality in its jobs gap interactive chart. If the economy continued adding 217,000 jobs per month, we would close the real gap in May 2018.
In addition, the quality of jobs has changed:
The big gainers, meanwhile, have been healthcare (1.56 million), restaurant and food services (959,000), business and professional (794,000) and social work (543,000).
For more context, let’s compare some recoveries:
Note that output is still sub-par. The 1981 recession, which before the latest downturn was the most severe since the end of the Depression (although 1947 saw a very deep drop, but quick rebound), saw a powerful rebound within six quarters from the start of the recovery.
One difference is that the federal government under Ronald Reagan did not respond to the downturn and its aftermath with austerity. Federal hiring rose. State governments were not crippled by years of tax cuts, so they didn’t have to cut many jobs and also added employment as the recovery began. Neither was the case in 2008, so government payrolls are down by 627,000.
The 1981 recession was caused by the Federal Reserve to defeat inflation — it was then Chairman Paul Volcker’s harsh medicine. But the American economy was still strong, including a massive manufacturing sector that also employed millions more than today. America was still the world’s leading exporter. Demand was strong once the worst of the recession passed. The middle class was still strong. NAFTA and other neo-liberal trade deals were in the future.
The 2007 recession was caused by a catastrophic financial bubble popping. Profits were privatized and losses were socialized. The demand loss was immense and is still with us. Household incomes were wrecked. And the U.S. economy was very different, with fewer good jobs, the burden of a massive, job-killing trade deficit and a dangerous financial sector.
So, no, the jobs gap has not been refilled. Much less has quality been recovered, with more work part-time, temp and low paid.
And Don’t Miss: Inequality is about more than money | Lawrence Summers
Today’s Econ Haiku:
Scandal at GM
No one can recall recalls
How about jail time?