Comparing Jobs in Recessions and Recoveries

Source: Bureau of Labor Statistics.

For the 37th consecutive month, the country added jobs: 204,000 nonfarm payroll jobs in October, to be more precise.

But employment still has a long way to go before returning to its pre-recession level.

The chart above shows economic job changes in this last recession and recovery compared with other recent ones; the red line represents the current cycle. Since the downturn began in December 2007, the economy has had a net decline of about 1.1 percent in its nonfarm payroll jobs. And that does not account for the fact that the working-age population has continued to grow, meaning that if the economy were healthy there should be more jobs today than there were before the recession.

Let’s assume we eventually return to pre-recession employment levels while absorbing all the new people who should enter the labor force each month during a healthier economy.  If you believe that we will get back to the labor force participation rate that we had when the recession ended in June 2009, we would need more than seven years of monthly job growth at October’s pace to reach a jobless rate of 6 percent. (There is disagreement about whether the labor force participation rate will ever rise to what it was a few years ago, though; you can run your own job creation projections under different labor market assumptions using this nifty calculator.)

There are now 11.3 million people looking for work who cannot find it. The tally of those who are underemployed â€" that is, adding in those workers who are part time but want to be employed full time, and workers who want to work but are not looking â€" brings the total up to 21.7 million.

As bad as all these figures are, it’s worth remembering that job markets in the decade after a financial crisis are always terrible. In fact, layoffs were far worse and lasted much longer in the aftermath of the financial crises that struck, for example, Finland and Sweden in 1991 and Spain in 1977, not to mention the United States during the Great Depression.