Friday, August 20, 2010

US Jobs Recovery to Take Years

According to the The Hamilton Project at Brookings (2010, August 20), the US economy will have to create 11.6 million new jobs in order to return to pre-economic crisis employment levels. Moreover, the US economy is still shedding jobs, which means that the nation's unemployment wounds will fester into the indefinite future. Even after employment levels begin to increase in the US, Brookings reports that a full jobs recovery could take upwards of 5-12 years with the longer scenario being more likely.
The US economy will need more robust growth to close this gap. If future job creation reaches about 208,000 jobs per month, the average monthly job creation for the best year for job creation in the 2000’s, it will take almost 140 months (about 11.5 years) to reach pre-recession employment levels. In a more optimistic scenario with 321,000 jobs created per month, the average monthly job creation for the best year in the 1990’s, it will take 59 months (almost 5 years).
The chart below shows the amount of time necessary to close the employment gap for different rates of job creation based on experience data from the decade beginning in 2000.

[Click image to enlarge]

The US is now enduring the worst unemployment crisis since the Great Depression. Currently, more than 15.1 million Americans are unemployed, which compares to 12.8 million Americans at the peak of the Great Depression in 1933.

Source: Greenstone, M & Looney, A (2010, August 20), The Long Road Back to Full Employment: How the Great Recession Compares to Previous US Recessions, Brookings.

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