How Long Will It Take To Close The Job Gap? (CHART)

The U.S. economy gained 192,000 jobs in February 2011, while the unemployment rate dropped down to 8.9 percent. That's good news. Just don't expect employment to reach pre-recession levels anytime soon.

Hamilton Project Director Michael Greenstone and Senior Fellow Adam Looney of the Brookings Institute illustrate this grim reality by proposing three hypothetical situations for monthly job creation in the comings years. Imagine, they suggest, if the economy consistently grew at these rates (titles mine):

-- Strong: 208,000 per month: Average monthly job creation during 2005, the best year in 2000s.

-- Amazing: 321,000 per month: Average monthly job creation during 1994, the best year in 1990s.

-- Yeah, right: 472,000 per month: Most jobs created in a single month of the 2000s.

As Greenstone and Looney write:

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 June 2023 -- another 12 years -- to close the job 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 May 2016 -- not for another five years.

For reference, the Bureau of Labor Statistics noted today that total "total payroll employment has grown by 1.3 million, or an average of 106,000 per month" in the past year. In other words, expect job reports to be a topic of national debate for the better part of the coming decade.

Here's the graph:

Comments

[EinChicago]

09:07 AM on 03/08/2011

Scenario 1 gets us a second term for teh current admin, making it the best case scenario. Scenarios 2 and 3 guarantee Reagan Part Deux for at least 8 years and are the worst case scenarios in more ways than one.

The current admin has, at most, 6 months, to somehow turn the economy around to the point that it is appreciably noticeable or we are condemned to at least 8 years of GOP rule and the current guy goes into the history books as the most incompetent president ever. Fair or not, that is what will happen.

[AmyInNH]

07:05 PM on 03/15/2011

Could get dicey. Depends on who the GOP runs. It's have to be a pretty bad choice to not win the next round.

[imusintheevening]

04:33 PM on 03/07/2011

In what decade will a republican congress address the jobs issue?

[AmyInNH]

07:11 PM on 03/15/2011

Where did you get the idea they were going to do anything about jobs? Out this way, they only said they wanted to cut the deficit. Washington has no experience with industry, other than lobbyists.
As for Democrats, apparently the only Jobs they're interested in is Steve.

[LeftCoastEng]

01:54 PM on 03/07/2011

We certainly aren't going to help create the jobs we need by deeply cutting government spending. The root of the problem and, therefore the solution, is our trade policies. The tariffs that are needed to re-balance our trade with the rest of the world would raise revenue that could be used for debt reduction and tax relief for those burdened by the higher prices that would result from the tariffs. The jobs created would grow the economy, increase revenue and reduce the debt.

Let's get this discussion started with our politicians!

[Archangel 2020]

01:50 PM on 03/07/2011

We are pretty much screwed however you look at it! The extension of UE benefits only extends the time you can apply not an actual additional tier of benefits. That being said the money paid could have been put to better use starting a 21st century version of the CETA program, which would have put people to work earning a decent salary in critical areas of our economy. But instead we are being turned into a Third World country in record time.

[AmyInNH]

07:20 PM on 03/15/2011

In record time, interesting. The offshored and importing tide has been rising like a tsunami on the horizon for quite a few decades now. Double whammy, not only were the jobs washed away, excess labor washed ashore. Ross Perot's giant sucking sound, from his campaign, many years ago.

[Carrie Krueger]

01:23 PM on 03/07/2011

I am not sure spending a lot of time looking at this chart will be helpful for job seekers. It's obvious the job market will remain tight for the time to come. It continues to fall to job seekers to be resourceful and persistent in order to position themselves to get hired. I recommend focusing on success and figuring out what it will take to be one of the people who lands a job in the next three months. My blog today has action items to take now to prepare for whatever "job boom" may come: http://blog.jobfully.com/2011/03/preparing-for-a-hiring-boom/ Don't worry about when the job gap will be closed. Focus on what you can do to get hired.

[OldTulsan]

01:31 AM on 03/07/2011

http://www.vdare.com/roberts/110305_jobs.htm
03/05/11 - More Jobs Mirage In February--BLS Continues To Overestimate Job Growth

"By Paul Craig Roberts

The announcement on March 4 that 192,000 new jobs were created in February was greeted with a sigh of relief. But the number is just more smoke and mirrors, as I will show shortly. First, let’s pretend the jobs are real. What areas of the economy produced the jobs?

According to the Bureau of Labor Statistics, 152,000 of the jobs or 79% are in private services, consisting of: 11,700 jobs in wholesale trade, 22,000 in transportation and warehousing, 36,400 in administration and waste services (of which 15,500 are temporary help services), and 36,200 in ambulatory health care services and nursing and residential care facilities. Entertainment, waitresses and bartenders accounted for 20,000. Repair and maintenance, laundry services, and membership associations accounted for 14,000.

As one who has often reported the monthly payroll jobs breakdown, I am struck by the fact that these categories are the ones that have accounted for job growth for year after year. How can this be? How can Americans, who have had no growth in their real incomes and who are foreclosed from their homes and maxed out on credit card debt, car payments, and student loans, spend more every month in bars and restaurants? How can a few service areas of the economy grow when nothing else is?

The answer is that there were not 192,000 new jobs.."

[OldTulsan]

01:33 AM on 03/07/2011

"...Statistician John Williams estimates the reported gain was overstated by about 230,000 jobs. In other words, about 38,000 jobs were lost in February.

There are various reasons that job gains are overstated and losses understated. One is the BLS’s "birth-death model." This is a way of estimating the net of non-reported new jobs from business start-ups and job losses from business shut-downs. During recessions this model doesn’t work, because the model is based on good times when new jobs always exceed lost jobs. On the "death" side, if a company goes out of business because of recession and, therefore, doesn’t report its payroll, the BLS assumes the previously reported employees are still in place. On the "birth" side, the BLS adds 30,000 jobs to the monthly numbers as an estimate of new start-ups.

Williams estimates the "death" side is really reducing employment by about 200,000 per month, and the "birth" side is stillborn. Therefore, "the BLS continues regularly to overestimate monthly growth in payroll employment by roughly 230,000 jobs." The benchmark revisions of payroll jobs bear out Williams. The last two benchmark revisions resulted in a reduction of previously reported employment gains of about 2 million jobs.

Another indication is that despite 10 years of population growth, there are 8 to 9 million fewer Americans employed today than a decade ago.

Some "New Economy" we have. If only we could have the old one back."

[bd7769]

07:53 AM on 03/07/2011

Based upon what you are saying, then this would help to also explain that the unemployment rate is really much higher. Thanks

[NeverUndecided]

10:36 PM on 03/06/2011

This is seriously off. The BEST real case is the worst one depicted here - absent truly important (radical) policy changes or entire huge, new industry hiding in the twigs, there simply is no driver to create that many middling-skilled jobs. And remember, nobody globally any longer believes the US is a sure bet, particularly in the minds of US-based multinationals.

[loki]

09:00 PM on 03/06/2011

There are some companies, like a certain private family owned rental company ( largest in the USA ) that hire people on a monthly basis to work their lower wage customer service day shift jobs. They hire homeless, students, people down on their luck, the disabled and the elderly. But they only keep them employed long enough to get the tax benefits associated with each category of distressed unemployed worker. Once that time frame is up, usually between 6 months to a year. Once they get their 2k to 7k per person tax write off, they find a way to let these people go. Of course they also work hard to sell these people one of their many used cars pulled from their rental fleets. They even do the loan paper work for them and find banks who will back them. So they get cheap labor, huge tax breaks, and tens of thousands extra from pushing cars on them. Just in St. Louis alone they hire between 60 and 100 people every month for a job that only has a couple hundred employees. So thats 60 to 100 a month being disposed of, after they profit from them through false pretense of promises of great long time employment and good benefits. I know many who have been through this scam by a fortune 100 family company.

[loki]

08:47 PM on 03/06/2011

There is no way they would show the wage decline that will accompany the job increases. It would scare the pants off everyone.

[duffmt6]

01:53 PM on 03/07/2011

Wages increased 1 cent/hour in the m/m in the most recent job report. The average work week increased, accounting for the slight increase in weekly income.

[Basselope]

03:36 PM on 03/06/2011

It's all so deceptive right now. I know a ton of places that are hiring, but ONLY 1099 workers who can work from home on a project basis. These people often stay on the unemployment rolls, while working in 1099 situations, even though they may not be draining state resources since the $$ they receive is greater than their benefit payout.. but they stay on the unemployment rolls.

[Nick9075]

05:09 PM on 03/06/2011

Probably because they (these companies that are "hiring") cannot find people who will pass the 'background check' (which includes a credit check now), or who don't have the 'skills' they need. I wonder what skills are so in demand that Americans (especially those un or underemployed) don't possess that companies have to hire H1B's or Temps from overseas..
And don't forget that many companies have a silent or unwritten policy not to hire anyone who has been unemployed longer than a few months, has 'moved around' too much or has 'bad credit'

[loki]

08:50 PM on 03/06/2011

They also wont hire people who dont have permanant addresses or a stable phone number. So all the people who lost everything the last couple years are out in the cold for good.

[jdevans]

11:32 AM on 03/07/2011

The list of requirements for IT jobs are as long as your arm. Then if you don't have 15 years of Java programming experience, when Java's only been in existence 16 years, they use that as justification for hiring foreigners with H1B visas who work for lower wages than Americans.

A friend is managing an IT project at State Farm Insurance headquarters. Out of the over 25 people in her group, she's the only American. The rest are Indians with H1B visas.

[SeeDaddy]

06:38 PM on 03/06/2011

Only people actively seeking employment are counted. If they are working at home and not filing job applications, they are not counted as unemployed.

[Basselope]

07:03 PM on 03/06/2011

If they are on the unemployment rolls, they are counted. Only once they stop sending in those forms, do they stop counting.

[loki]

08:52 PM on 03/06/2011

a lot of people are still looking for jobs and not counted. The only way the gov could count them is if they are still registered and do their searches through the unemployment offices. But if they are no longer collecting unemployment, they might not use the unemployment office to search as its usually useless anyway.

[fortressfountain]

03:24 PM on 03/06/2011

It matters the kind of jobs being created. Are they full time positions with benefits or the typical 10 hour a week jobs the megas provide to recieve the earned income tax credit?

[MikeDu]

03:05 PM on 03/06/2011

I said back in 2008 that under present circumstances a 'recovery' would mean jobs created in Indonesia for american corporations, not american jobs. This ideological zealot push to 'globalize' has been an unmitigated disaster for the U.S. The U.S. Chamber of Commerce won't be happy til US workers areworking for a couple dollars an hour under sweatshop conditions, like Guatamala.

[jdevans]

09:46 PM on 03/06/2011

Which is why the protest against Wisconsin Gov. Scott Walker's plan to get rid of collective bargaining is so important. Otherwise, the US will become a third-world country with the very rich and the very poor and no middle class.

[jcarterla]

02:00 PM on 03/06/2011

Take the worst case scenario and double it. Then send a thank you note to every politician who has been bought and paid for by corporate america.

[mezcal]

01:28 PM on 03/06/2011

Amusing chart.
Immediately reminded me of this.

http://www.youtube.com/watch?v=M1owcncKCHg

[guveqzero]

12:25 PM on 03/06/2011

The chart is a joke. People will be dead after tens years with no job. Fire the consultant that put this information together for our politicians. It will not happen this way.

[Konrad Klean]

01:04 PM on 03/06/2011

Keep in mind, the dead can't be unemployed and the burying of their bodies will create some jobs in the mortuary home sector. Couldn't hope for a better scenario if you were Mao.