|Source: The Hamilton Project, Brookings Institution|
The US jobs market improved
moderately in March and on Friday we reported that
216,000 new jobs were added in the month. More than one-third (36%) of those
who lost and found jobs had to take a pay cut of 20% or more.
The Wall Street Journal reports that the recovery seems to be going
workers taking lower-paying jobs. More than half of
those full-time workers who lost jobs between 2007 and 2009
and then found full-time work by early last year said their
new jobs came with lower wages. Some 36% saw a pay cut of
20% or more.
Gary Burtless, Senior Fellow at the
wrote that the improvement in the job market has done little to reduce the
ranks of the long-term unemployed. The March household survey shows that the
number of Americans who have been unemployed for 6 months or longer increased
almost 130,000 in March. The number of long-term unemployed was essentially the
same in March 2011 as in December 2009, when the labour market recovery began.
The number of long-term unemployed was almost 4.8m higher than the number in
December 2007, the last month of the 2002-2007 economic expansion.
He said the latest jobs report contains another hint of labour market weakness:
Workers’ real earnings are now beginning to slip. Between October 2010 and
February 2011, real hourly and weekly earnings in the private sector fell 1.1%.
Meanwhile, Michael Greenstone,
director, The Hamilton Project and Senior Fellow, Economic Studies and Adam
Looney, Senior Fellow, Economic Studies, and Policy Director, The Hamilton
Project, at the Brookings Institution,
wrote that in addition to the threat of stagnating wages for both men and women, the
United States continues to face a severe job gap of just under 12.2m jobs.
As in previous months’ postings,
The Hamilton Project updates America’s “job gap,” the number of jobs that
the US economy needs to create in order to return to pre-recession employment
levels while absorbing the 125,000 people who enter the labour force each month.
The chart above shows how the job gap has evolved since the start of the
Great Recession in December 2007, and how long it will take to close under
different assumptions for job growth. The solid line, in particular, shows the
net number of jobs lost since the Great Recession began. The broken lines track
how long it will take to close the jobs gap under alternative assumptions about
the rate of job creation going forward.
The economists say that 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 June 2016 - - not for another five years.