EPI’s Heidi Shierholz makes important points:
In terms of job growth since the recession officially ended (June 2009), this time around isn’t that different from the last two recoveries—better than the 2001 version and a bit worse than the 1990s one (though at the end of the 1990s line you can see job growth poised for a serious takeoff—something you don’t see in today’s numbers).
As Heidi puts it: “This figure underscores that the key difference between this recovery and the last two is the length and severity of the recession that preceded them.”
She also points out that: “The length of the average workweek was unchanged in February at 34.5 hours, almost recovering its December 2007 level of 34.6 after dropping to 33.8 in the recession. This is a positive sign for future job growth because it means that we have nearly worked off the “hours overhang,” and employers needing to add additional hours will be more likely to add new workers instead of increasing the hours of the workers they have.”
CBPP colleague Chad Stone does too:
As I noted earlier, it’s important to look at the share of the working-age population in the labor force, because as this bounces back to more normal levels, it will take faster job creation to bring down the unemployment rate.
“The recession and lack of job opportunities drove many people out of the labor force, and we have yet to see a sustained return to labor force participation (people aged 16 and over working or actively looking for work) that would mark a strong jobs recovery. Growth in the labor force was encouraging in February, as the labor force participation rate edged up to 63.9 percent. Except for January’s 63.7 percent, however, that is the lowest it has been since 1983.”
Chad also has some useful reminders re how tough it still is out there for job seekers. Let us not confuse favorable trends—which we have—with favorable levels—which we have not.
Finding a job remains very difficult. The Labor Department’s most comprehensive alternative unemployment rate measure – which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs – was 14.9 percent in February, down from its all-time high of 17.4 percent in October 2009 in data that go back to 1994, but still 6.1 percentage points higher than at the start of the recession. By that measure, almost 24 million people are unemployed or underemployed.
Long-term unemployment remains a significant concern. Over two-fifths (42.6 percent) of the 12.8 million people who are unemployed – 5.4 million people – have been looking for work for 27 weeks or longer. These long-term unemployed represent 3.5 percent of the labor force. Before this recession, the previous highs for these statistics over the past six decades were 26.0 percent and 2.6 percent, respectively, in June 1983.
Chad’s reminders are important to keep in mind vis-a-vis recent wage trends. Often, we tend to think of labor market weakness as soley affecting the “quantity” side of the equation–those seeking work, or more work (the latter being involuntary part-timers, e.g.). But as those who’ve been keeping up with my recent obsession re full employment (and by “recent,” I mean the last 20 years or so) know that slack job markets affect the “price” side of the equation as well–i.e., wage trends.
The figure below shows annual changes in hourly wages and weekly earnings. As slackness dragged on in the weak recovery, hourly wage growth decelerated from around 3% per year to around 2% (and with inflation running at around 3%, that implies declining real hourly wage rates). With the pick-up in hours described by Heidi above, we see the growth pace of weekly paychecks has improved, and that’s a good thing. But persistently high unemployment with lots of long-termers implies none of the pressures you get from a full employment job market.