10 Hard Facts About America's Economic Recovery

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As President Obama took part in his first-ever Twitter-facilitated town hall event Wednesday, a spokesman for House Speaker John Boehner told DailyFinance, "He's got a lot of questions to answer -- starting with, 'Where are the jobs?'"

The nonpartisan Economic Policy Institute took up much the same question in a conference call with reporters.

First, staff economist Heidi Shierholz outlined 10 facts about the recovery (which, you'll recall, officially began two years ago):

1. The real gap in the labor market is now around 11 million jobs.

"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."

2. Job growth in this recovery outpaces that following the 2001 recession, but is still too slow.

"In the 23 months since the official end of the Great Recession, payroll employment has grown by 550,000 jobs. Twenty-three months after the end of the 2001 recession, payroll employment was down an additional 773,000 jobs. However, the length and severity of the Great Recession means that we are in a much deeper hole. In fact, three years and five months from the official start of the Great Recession, we are still down a larger percentage of jobs (5%) as a share of pre-recession employment than at any single point of any post-WWII recession."

3. The loss of public sector jobs is a huge obstacle to growth in this recovery.

"The public sector is now shedding around 25,000 jobs per month, largely due to budget cuts at the state and local level. Since the official end of the recession, the public sector has lost 430,000 net jobs, while the private sector has added 980,000 net jobs. In other words, more than 40% of the private-sector job gains in this recovery have been canceled out by job losses in the public sector."

4. Most of the improvement seen in this recovery consists of a decline in layoffs, not an increase in hiring.

"Layoffs spiked dramatically during the recession, but have substantially slowed during the recovery. At this point workers are no more likely to get laid off than they were before the recession started. That is a very positive sign, but has a flip side in the trend in hiring. We have seen very little improvement in hiring, which is still roughly 25% below its 2007 average."

5. The current problem is not that we lack the right workers, it's that we lack enough job openings.

"Some have claimed that hiring has not picked up substantially because employers can't find workers with the needed skills. If this were the case, we would expect some sectors to have more job openings than unemployed workers, or at least to have much more balance, as employers in those sectors struggle to find the workers they need. But there are no major sectors where that is happening."

6. The share of the working-age population with jobs has not yet improved.

"The unemployment rate, of course, has dropped somewhat, falling 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 (and thus not being counted among the officially unemployed)."

7. "Underemployment" has also improved very little in the recovery.

"The number of workers who want a full-time job but have had to settle for part-time hours shot up from 4.3 million in the first half of 2007 to 9 million by the spring of 2009. That number hovered around the 9 million mark until the end of 2010, and has not improved much this year. Importantly, the fact that there has been so little improvement here belies the claim that businesses aren't hiring because they are wary of the potential burdens of laws like health care or regulatory reform. If businesses had work to be done but were wary of making new hires, then they would ramp up the hours of their existing workers."

8. Unemployed workers continue to face near-record spells of unemployment.

"The share of unemployed workers who had been jobless for more than six months shot up from 17.6% in the first half of 2007 to 29.3% at the official end of the recession to over 45.6% by the spring of 2010, an all-time record. It has bounced around 45% since then, and is currently 45.1%. The fact that layoffs have abated in the recovery provides little relief to the already unemployed."

9. Racial and ethnic minorities have fared worse than whites in both the recession and the recovery.

"At the official end of the recession, the unemployment rate for whites was 8.7%, which has declined somewhat to 8.0%. The unemployment rate for Hispanics at the end of the recession was 12.2%, which has declined by a lesser extent, to 11.9%. Black workers have been hit the hardest: At the end of the recession the black unemployment rate was 14.9%, and it has since increased to 16.2%."

10. Wage growth remains extremely low.

"Persistent high unemployment also hurts wage growth for workers with jobs. The reason is straightforward -- employers don't have to pay substantial wage increases to keep their workers when they know those workers don't have good outside options. Wages not adjusted for inflation have grown 1.8% over the last year, well below the growth rate of 2.6% at the end of the recession and about half the growth in the period before the recession started. Furthermore, with inflation growing faster on average than wages since the end of the recession, real wages are lower now than they were when the recession ended."

What It All Means


For the 18 months of the Great Recession, labor markets deteriorated. At the end of 2009, they stopped dropping, but they've been basically stagnant ever since. Hiring is now 25% below where it was when the recession began. People with jobs have no greater chance of getting laid off today than they did before the recession, but what the 14 million Americans looking for jobs need is hiring improvement.

Shierholz's colleague Josh Bivens explained what distinguishes our current anemic recovery from the periods of growth that followed other recent recessions -- namely, the continuing loss of public-sector jobs. "The pace of private-sector job creation during the economic recovery that began in June 2009 is, in fact, faster than during the previous recovery and in line with the recovery of the early 1990s," Biven has written. "The current ongoing decline in government jobs, however, is a historic anomaly."

Biven also emphasized the importance of being clear about "the actual root cause of today's economic problems," which he identifies as "the depth and severity of the recession that began in December 2007" The bursting of the housing bubble wiped out $8 trillion of wealth, which hasn't come back -- and home prices have continued to fall. Consequently, hundreds of billions of dollars of household spending has been lost, drying up the demand for goods and services that fuels employment. Although "the stubborn woes of the job market have led many to claim that economic policies enacted in recent years (particularly those strongly associated with the Obama administration) have delayed a more rapid recovery," Biven says "this claim is wrong."

He admits that people want new explanations -- the bursting of the housing bubble is old news. But the fact that the government "never plugged the hole in demand" is what continues to bedevil the economy. No other explanation works, he insists (e.g., the claim that some great uncertainty about anti-business government initiatives is holding back hiring).

Looking forward, Biven said he is greatly concerned by the general idea that we need to close the deficit in the short term. Both economists worry that budget cuts currently under discussion will take effect too soon: In the next couple of years, they say, we need more fiscal support, not less. They expressed support for measures that would add some stimulus to the economy, such as an extension of the payroll tax cut. And they predicted that Friday's Labor Department numbers would show 100,000 new jobs -- just barely enough to keep up with growth in the population. The unemployment rate will thus remain at 9.1%. "We are not going to see the 350,000 jobs we need to see," Shierholz said. Given the grim reality that "the labor market has actually made little improvement since the depth of the downturn," EPI offers the following policy recommendations for the federal government (in lieu of what they call a premature focus on deficit reduction):

  • Provide fiscal relief to states
  • Expand the safety net (which, by getting money into the hands of people who will spend it, stimulates demand and generates jobs)
  • Approve additional spending on infrastructure
  • Implement direct job creation programs in particularly hard-hit communities
  • Support work-sharing to avoid layoffs
  • Have the Federal Reserve do more quantitative easing and/or target a somewhat higher inflation rate (e.g., 3% to 4%) to both reduce real interest rates and erode debt
  • Lower the value of the dollar to boost net exports
The full report can be found here.

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talesofthegr

I'm starting a podcast along these same lines called Tales of the Great Recession to share peoples stories of long term joblessness, from the struggle of a long search to the joy of finding a job, and what you learned in-between. Please send your stories to talesofthegr@aol.com. The first podcast will be available free through itunes on 7/22, and I plan on doing it as a weekly podcast for as long as the stories keep coming in.

July 16 2011 at 12:58 AM Report abuse rate up rate down Reply
Osamabama

A military Coup took place with the introduction of Sarah Palin as John McCain’s running mate.

Obama is not the president, he’s the acting president. He disappeared for 2 weeks after his election win only to reappear looking exhausted sitting next to John McCain, with a bad poker face, for a press photo shoot. He has been turned into a Pentagon puppet ever since.

A great number of stories in the news are completely fabricated to generate chatter for the feds. They have the majority of comments on many news sites and are actively involved in the moderation of sites since the “death” of Osama Bin Laden.

Osama Bin Laden is a code. It appears he was created by the New World Order. The New World Order consists of some of the richest people in the world with the goal of overthrowing the US government, some from inside our own government. They are also trying to collapse our currency and are behind all of the “buy gold” hype, not to mention thousands of money making opportunities online and late night infomercials. They are positioned to make billions by collapsing our economy.

The attacks on 9/11 appear to be attacks on capitalism. The people that make up the New World Order are media moguls, CEO’s and many others. There’s also a reason why all the CEOs who ran in the last midterm didn’t get elected either.

You will not read about this in the media since most of the media has been forced to cooperate or has been paid to cooperate.

What you’re about to learn is true and not embellished in anyway. Here’s what Obama, Osama, Biden, Bin Laden, the FBI’s Most Wanted Terrorists, and Sarah Palin have to do with the last election and the military’s overthrow of our government.

Do not hesitate to call the Pentagon, the CIA, the FBI and all branches of the federal government and tell them who they work for. Obama doesn’t need to be signing anymore things into law. Enough is enough!

http://electnomorespys.blogspot.com/

July 10 2011 at 2:39 PM Report abuse rate up rate down Reply
hassalan01

The article is highly biased in favor of Keynesian economic fallacies. Greece is running a huge budget deficit relative to its GDP and Greece has reports of 16% unemployment.

Just as Keynesian fallacies put Greece into huge problems that include high unemployment, the policies of the Obama administration are increasing unemployment in the US by implementing Keynesian fallacies

July 10 2011 at 2:01 PM Report abuse rate up rate down Reply
DukeOfUrls

"6. The share of the working-age population with jobs has not yet improved.
"The unemployment rate, of course, has dropped somewhat, falling 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 (and thus not being counted among the officially unemployed)."

Exactly!, it ain't rocket science, that is why the unemployment rate being reported is an absolute joke.
Just because you are no longer collecting unemployment does not mean you are employed! You have simply fallen off the rolls and as a reportable number, are non-existent.

July 10 2011 at 12:24 PM Report abuse rate up rate down Reply
tahlohntusky

I see a mixed bag in this article.
1. While working age population increases you don't take into account of the vast retirement (or desire to retire) baby-boomers.
2. Agreed, but I don't buy the premiss that we are out of the recession. As in the stock market, look for the second movement before acting.
3.I disagree, public sector jobs, while adding "money and jobs" to the economy do not necessarily create jobs within themselves. Conversely, private sector jobs typically can create 3-5 more jobs from themselves. pretty basic math.
4. No reason nor need for businesses to hire. why? where are the customers. should they just hire out of good will? don't forget the invisible hand...
5. Yes and no. The idea that there is a lack of workers in ANY segment is false. There are people with 20 yrs experience and two Masters Degrees looking to do anything to pay the bills is a reality. Just try and compete in the job market today, which leads to statement #7 (because #6 is silly)
7. Ridiculous. Fear plays into all aspects of life, especially when running a business or investing. nobody hires, fires, increases hours or the like until they know what the exterior influences are going to impose upon their livelihood.
8. Without sounding like a 150 year old record, when you continue to pay folks to not work harder at finding work, they won't. In all fairness, there isn't much out there but you've got to try. Unfortunately when you're getting 3/4 of your previous pay without working the government isn't setting up the most "motivational" venue to regain employment.
9. Probably.
10. Ummm, yeah. Why would you increase wages, hours, heck, vacation and car allowances too! We're in a major downturn. Everyone pulls back and "costs" eventually come down. ...

Quick Econ course 101... If salaries are low people don't buy as many eggs because they can't afford them. Egg supplier's first reaction is to raise the price because he sees a loss in sales. 30 seconds later he reduces the price because he recognizes that his market will stick with him at a reduced yet profitable margin. If he bleeds them out he losses everyone. - Also, he doesn't hire right now either (sound familiar). He tries to hold onto the staff he has and produce what's necessary to stay afloat.

Econ 201 - If you force him out of business with health, green, family, U-pick initiative, everyone is unemployed and there are no eggs to buy regardless if you do or do not have money.

Overall the article had some insight but the summary pee'd on the fire. Let go of the politics friends, whether your D, R or something around that, it takes you and me to make this thing work, not our Reps.

Here is the best thought/advice I can give you...Go start a business tomorrow. It'll be tough, it'll be small, people will say you're crazy. But when you make it through this mess and survive - you'll be a true American hero and doing much better than you ever have.

Tomorrow is the first day of the rest of your life.

July 10 2011 at 4:46 AM Report abuse rate up rate down Reply
CryConsCry

Yes, Obama is the president that inherited Bush's economic meltdown so is responsible for handling it. The current republican majority in the house ran on job creation and has done NOTHING to help it. They are the party of do nothing for the common man and everything for their corporate masters. When will the common man wake up to this?

July 09 2011 at 5:19 PM Report abuse rate up rate down Reply
Cindy Czocher

north dakota has jobs
3.5% unemployment and good wages

July 08 2011 at 8:33 PM Report abuse rate up rate down Reply
A_Mivehchi

I do agree with 2 pieces. Works hired for infrastructure, and lowing the value of dollar to fuel exports.the race card has been overplayed. instead of categorizing, we all (Govt. included) need to collectively look at common factors to get this economy rolling by looking in to and focusing within USA first instead of helping eveyone else internationally. Are they doing anything to help us within our borders here in US of A?

July 08 2011 at 5:34 PM Report abuse rate up rate down Reply
partsautomall

AMERICA HAS NO FAITH IN THIS ADMINISTRATION.THE GUY IS A LUNATIC NOT TO MENTION ANTI-AMERICAN.

July 08 2011 at 4:36 PM Report abuse rate up rate down Reply
rwalton401

Josh Bivens is an obvious Obama suck-up who has no clue about what will turn the economy around. Repealing ObamaCare would probably gain us at least a 1% drop in unemployment, as businesses begin to understand that they will not be responsible for the huge healthcare costs coming our way in 2014. Repealing most of the regulations the Obama-led Congress has passed the past few years would gain even more employment, as businesses would see the certainty of a good business climate forming. Everyone is blaming Bush for this recession, but the democrats were in power for a full year before the recession even began. The democrats were in charge of Congressional oversight and completely blew off the housing crisis. The 2007-2008 democratic Congress is responsible for starting us down this debt-ridden path. There is plenty of blame to go around. Too much government got is in this mess and getting rid of all but the essential parts of government is the only way to get us out.

July 08 2011 at 3:06 PM Report abuse rate up rate down Reply
1 reply to rwalton401's comment
CryConsCry

What a moron you are. Insurance companies had a 30% surge in growth over the last year due to Obamacare's requirement to insure dependents under 26. If it was repealed then those jobs would be LOST nimrod. It must really smell around you since you seem to do nothing but talk out of your a$$.

July 09 2011 at 5:23 PM Report abuse +1 rate up rate down Reply
1 reply to CryConsCry's comment
American-n-Arizona

You actually made his point for him, so who is the real moron, you CryConsCry! Obamacare is costing us all money already, Insurance companies gaining jobs is not a good thing. This is only the beginning of the end of our Democracy. The American people need to wake up and realize that the government is not good at running social programs. Look at Social Securiy, broke, Medicare, broke. People it is our money the are wasting we need to take responsibility for our own actions and in actions!

July 09 2011 at 7:46 PM Report abuse rate up rate down