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US Economy: Economists at the Brookings Institution think-tank in Washington
DC, said on Friday that it may take 12 years for American employment to return
to the pre-recession level based on average jobs growth in the 2000s.
Michael Greenstone, director, The Hamilton
Project, a program within the Brookings Institution focusing on long-term
growth, which is named after the first Treasury secretary Alexander Hamilton,
together with a colleague, Adam Looney, issued revised
estimates of the 'jobs gap' -- the number of jobs that needs to be
created for the economy to return to pre-recession employment levels and to
absorb the 125,000 new entrants to the labour force each month.
On Friday, the US Bureau of Labor Statistics
reported that the US lost 95,000 in September, private-sector
payroll employment continued to trend up modestly at 64,000 while the public
sector shed 159,000 including 77,00 temporary census workers. The unemployment
rate was unchanged at 9.6% and the broad measure of unemployment rose to 17.1%.
Based on the September unemployment numbers, the Brookings' economists estimated
the job gap grew to 11.9 million jobs, widening for the fourth month in a row.
The graph above shows how long it will take to fill the job gap at different
rates of job creation. The economists said that if the economy adds about
208,000 jobs per month (the average monthly rate for the best year of job
creation in the 2000s) then it will take almost 12 years to close the job gap.
At a more optimistic rate of 321,000 jobs per month (the average monthly rate
for the best year of the 1990s) the economy will reach pre-recession employment
levels only after five years.
The economists also warned that threatening the core of the American Dream, a
rising number of communities across the nation confront the permanent loss of
industries, a glut of empty homes, and high rates of unemployed but able
workers. They say while history suggests that most communities will bounce back
somewhat quickly from recessions and other economic shocks, some do not. The
time necessary for a complete recovery may be measured in decades for these
Michael Greenstone and Adam Looney cite research they
have done on what happened to some of the hardest hit counties from the
1980-82 recession, which was the deepest recession in the last several decades.
They say that even after the US economy had recovered from that economic shock,
the 20% of counties that were hit hardest by the recession experienced smaller
increases in their employment-to-population ratios than the rest of the county
and slower growth in income per capita for decades to follow, underscoring the
persistence of these employment problems.
President Barack Obama speaks about the latest jobs report and the economy, from the Ernest Maier Block Factory in Bladensburg, Md: