U.S. jobs growth may have picked up earlier this year, offering the millions of unemployed hope that better days are ahead. But once again, the government’s monthly unemployment report comes with disappointing news.
In April, the nation’s employers created 115,000 positions, after adding 154,000 in March, the Labor Department reported Friday. This was less than economists had expected, and investors are clearly disappointed. But perhaps it’s about time we face the hard truths about the job situation in the U.S.: The unemployment rate probably won’t ever fall to pre-recession levels. At least not anytime soon.
True, the unemployment rate edged down to 8.1% in April from 8.2% the previous month. That’s not because more people found work, but rather because they dropped out of the labor forced and aren’t accounted for in the government’s statistics. Jobs growth had picked up earlier this year, just as it did at the start of 2010 and 2011, only to tailspin amid economic shocks across the global economy. Last year the Japanese tsunami and other factors interrupted markets. Later this year, talk of higher oil prices and a euro zone recession could weigh on the U.S. economy…
The February Jobs Gap (Latest available estimate by the Hamilton Project)
As of February, the U.S. faces a jobs gap of 11.4 million jobs, 5.2 million from jobs lost since 2007, and another 6.1 million jobs that should have been created in the absence of the recession.
The chart below, which incorporates pre-recession assumptions about labor force growth from the Bureau of Labor Statistics, shows how the jobs gap has evolved since the start of the Great Recession in December 2007, and how long it will take to close under different assumptions for job growth. The solid line shows the net number of jobs lost since the Great Recession began. The broken lines track how long it will take to close the jobs gap under alternative assumptions about the rate of job creation going forward.
If the economy adds about 208,000 jobs per month, which was the average monthly rate for the best year of job creation in the 2000s, then it will take until February 2020—8 years—to close the jobs gap. Given a more optimistic rate of 321,000 jobs per month, which was the average monthly rate for the best year of job creation in the 1990s, the economy will reach pre-recession employment levels by April 2016—not for another four years.