The US economy has just marked two years of recovery from its worst recession since the Great Depression. But few Americans are celebrating; indeed, most believe that the economy is still in recession. No wonder. Although gross domestic product has recovered to its pre-recession peak, employment has not.
The employment decline during the 2008 recession was more than twice as large as those of previous postwar recessions, according to the McKinsey Global Institute. Despite Thursday’s data showing US private sector employers adding 157,000 positions in June, and even if today’s non-farm payroll figures are much better than expected, about 14m Americans will remain unemployed and some 8m will be working part-time because they cannot find full-time jobs.
About 2m discouraged workers will have stopped looking for work. The fraction of the population working is near a 25-year low. According to the Hamilton Project, the US will face a “jobs gap” of about 21m jobs – the number of jobs needed to return the economy to its pre-recession employment level and absorb the 125,000 people who enter the labour force each month. At the current growth rate, that gap will not be filled for another decade.