Where Did the Jobs Go?

The new jobs report brings hope that that the economy is finally on a hot streak. But if you’re wondering why so many economists and analysts are reluctant to declare victory, have a look at this chart from the Economix blog showing how long it took in previous recessions to make up the jobs that were lost. So far we’re only made back one-third of the jobs lost during the Great Recession.

Things are indeed getting better. The problem is that the hole we’ve fallen into is so very, very deep. 

Today the Bureau of Labor Statistics will release the latest monthly jobs report. With luck, it’ll be fairly optimistic. But before the bloviating gets too far out of hand, you might want to get some perspective. The Federal Reserve Bank of Atlantic has come up with a “jobs calculator” that lets you figure out how long it’ll take, and how many jobs have to be created, to hit any specific target for unemployment.

For example, the current unemployment rate is 8.3 percent. If you wanted to cut that down to 6 percent in 12 months, the calculator will tell you what it takes: payroll employment would have to grow by 363,813 jobs per month. In January, payroll employment rose by 243,000 — and the calculator helps put that in context. Because there are plenty of people who’ll want you to think the jobs situation is either better or worse than it really is.

(A hat tip to @AnnieLowrey on this one).

There’s no question: the latest jobs report is an improvement, and the best report we’ve seen for a while. But here’s the challenge: we have to create enough jobs to (a) make up for those lost in the Great Recession and (b) to keep up with population growth. If the economy isn’t creating new jobs, we aren’t standing still, we’re actually losing ground.

As Derek Thompson at The Atlantic points out, we’ve got to do a lot better than this:

If we create 200,000 jobs a month, as we did in December, we’ll fill the jobs gap by about 2024.