There was little economic news for American workers to celebrate this Labor Day, given the dismal employment statistics released by the Bureau of Labor Statistics on Friday. This Thursday night, President Obama will respond with a major speech on his plans to improve the economy and specifically to boost job growth. With that in mind, I’ve decided to focus my posts this week on jobs and unemployment. To start off, here are 10 key facts you should know about our current unemployment crisis…
(1) Unemployment remains high. The unemployment rate has been at or above 9.0% for the past 26 months. In comparison, the rate when the recession hit in December 2007 was 5.0%. The employment-to-population ratio, which measures the percentage of the working-age population who have a job, is at a 25-year low of 58%. The share of adult men who are employed, 67%, is the lowest it’s been since the Great Depression.
(2) The problem isn’t layoffs but a failure to create new jobs. While layoffs increased sharply in 2009, they returned to normal levels by 2010. New hires, on the other hand, dropped in 2008 and have yet to recover. In June, for every 4.5 unemployed people, only one job opening existed.
(3) There are 11 million jobs missing from our economy. To bring us back to pre-recession employment levels, we need to add 11.2 million jobs – 6.9 million to replace jobs that disappeared in the recession plus 4.3 million new jobs for people who entered the labor force since the start of the recession.
(4) To fill the job gap anytime soon would require rapid job growth. To close the 11 million job gap (and keep up with the flow of new people into the working-age population) in five years would necessitate steadily adding 280,000 jobs a month. This is slightly more than the average monthly job creation during the late ’90s tech bubble and more than the year with the best job growth in the 2000s.
(5) Job growth is nowhere near what it needs to be. Job growth was strong in the first quarter of 2011, when an average of 165,000 jobs were gained each month. But since then growth has slowed. Over the past three months, growth averaged 35,000 jobs a month and, in August, there was zero net job growth. Given the slow rates of growth, the CBO projects that we will not return to pre-recession levels of unemployment (around 5%) until 2017.
(6) Job growth is slower than in previous recessions and recoveries. At this point in time after the recession of the early ’80s, growth was averaging 245,000 jobs per month. After the early ’90s recession, the average was 174,000 jobs per month. This is one of the slowest job recoveries in the past fifty years.
(7) Many workers face long periods of unemployment. Some people who are laid off find work quickly, but those who don’t often face long periods of unemployment. In every month since December 2009, at least 40% of unemployed people have been without a job for over six months. This level of long-term unemployment has not been seen in six decades.
(8) Some discouraged workers have given up looking for work. Last month there were 2.5 million people who were willing and able to work but were not actively seeking a job (and therefore aren’t counted in the unemployment rate). The labor force participation rate – the share of working-age people who are employed or actively looking for work – is 64%, the lowest it’s been since 1984, a time when a much smaller share of women worked.
(9) Unemployment has hit certain groups harder than others. Employment disparities that existed before the recession continue and new ones have emerged. Young people, men, African Americans and Hispanics, workers with low education levels, and women-headed households are all experiencing high unemployment rates.
(10) Real wages are also dropping. When adjusted for inflation, wages shrank 1.6% in 2011. Over the past year, wages grew 2.2% but were outpaced by 3.6% inflation.
That’s a quick overview of what’s going on with unemployment in the U.S. The important question is how do we fix it, which is what I’ll be exploring the rest of this week. Tomorrow I’ll be looking at why unemployment is so stubbornly high and job growth so slow. Thursday I’ll discuss what experts think we should do about it. And Friday I’ll summarize and respond to the plan President Obama presents in his speech Thursday night. So tune in the rest of the week for more!
Labor Day by the Numbers 2011
Economic Policy Institute // Nicholas Finio // September 5, 2011
How Congress Can Support, Not Hinder, Labor Market Recovery
Heritage Foundation // James Sherk // September 1, 2011
Job Crisis Not Abating: August Numbers Highlight What Must Be the No. 1 Job of Congress
Center for American Progress // Heather Boushey // September 2, 2011