Last week the Labor Department reported a small drop in the unemployment rate to 5.5 percent and the addition of 295,000 jobs in February. That good news represented the 12th straight monthly jobs gain above 200,000. While the impressive numbers weren’t sufficient to boost wages by much, they provided evidence that the long-suffering economy has rebounded impressively.
Yet, as analysts at the Brookings Institution’s Hamilton Project are quick to point out, America’s “jobs gap,” or the number of jobs the economy needs to create in order to return to pre-Great Recession employment levels while accounting for population changes, is still massive.
As of the end of February, the U.S. was still saddled with a jobs gap of four million positions.
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The chart below illustrates the evolution of the jobs gaps, which first surfaced with the start of the country’s worst recession of modern times. The inverted bell-shaped curve shows the gap at its worst between 2009 and 2011 before gradually narrowing.
The graph also shows how long the Hamilton Project’s analysts think it will take to completely close the jobs gap, using two different scenarios of job growth.
Under the first one, the jobs gap would disappear in August 2017, assuming the economy adds 191,000 jobs per month – or the average monthly rate of growth since the recovery began in March 2010.
Using a more optimistic projected rate of 275,000 new jobs created monthly – or the average monthly rate of job creation during the past 12 months – then the gap would close by September 2016.
As the recovery continues and the economy adds more jobs, the Hamilton Project economists note, the unemployment rate also continues to decline from its peak of 10 percent at the end of 2009.
“The current unemployment rate of 5.5 percent is only 0.7 percentage points higher than on the eve of the Great Recession,” according to the group’s analysis. “However, there are 8.7 million unemployed Americans, 2.7 million of whom are classified as long-term unemployed, having been without a job for longer than six months.”
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The overall employment-to-population ratio, a broad measure that includes people who have stopped looking for work, has changed little since the end of the recession, according to the study. It currently stands at 59.3 percent, up just 1 percentage point over the last four years and far lower than its pre-recession level of 62.7 percent in late 2007.
The Hamilton Project is a progressive economic policy think tank that develops innovative policy proposals for growing the economy. On Wednesday, the group sponsored a public forum in Washington on proposed policy interventions that was addressed by Vice President Joe Biden.
While no proposals discussed yesterday could be called game changers, they are meant to complement other more traditional approaches to stimulating job growth – such as government investment in infrastructure and job training and placement programs.
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One panel focused on proposals developed by Morris Kleiner, a professor at the Humphrey School of Public Affairs at the University of Minnesota, whose goals are to “systemize and harmonize occupational licensing regulations.” Kleiner’s proposals would reduce the regulatory and economic costs of occupational licensing among states, while increasing job opportunities and expanding consumer access to services.
A second panel discussed two new proposals by Adriana Kugler, a public policy professor at Georgetown University, and Michael Barr, a law professor at the University of Michigan.
Kugler proposed three pilot projects to give job seekers going through the unemployment insurance system a more seamless transition back to work. Barr advocates encouraging entrepreneurship for minorities and women through programs that promote more access to capital, networks and skills.
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