The Unending Employment Crisis
October 12, 2010
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Employment trends highlight just how bad the current economic situation remains.
Overall, the U.S. economy lost 95,000 nonfarm jobs in September. The private sector added 64,000 jobs (which was down from a 93,000 increase in August), but this gain was overwhelmed by the loss of 159,000 public sector jobs, a little over half of which came from cuts to state and local payrolls.
As the New York Times reports, “Local governments in particular cut jobs at the fastest rate in almost 30 years.” And given budget pressures and a lack of political will to boost federal aid to states and local governments, we can expect continuing bad news in the months ahead.
The chart below puts our current employment problems in some historical perspective. The horizontal axis shows how long, in months, it takes the economy to regain its previous peak employment total after the start of a recession. The vertical axis shows the percentage decline in employment relative to the peak number of jobs that existed at the start of the recession.
As the chart reveals, with the exception of the unusually short 1980 recession (which lasted only 6 months), employment recovery has been slower in each succeeding recession. And as for our current “recovery”—well we have lost far more jobs in percentage terms than during past recessions and it will clearly take far longer to return to peak employment totals than in past recessions.
There is no getting around the fact that we have a serious structural problem here–and it is not going to solve itself.