This Recovery Will Be Very, Very Painful

David Leonhardt, writing in the New York Times, paints a picture of US employment in dark, morbid colors, and makes the argument that even if the recession is over, we're a long way from a recovery that feels like a recovery. We might be moving into the epilogue of recession otherwise known as the slog, but this is why you shouldn't expect

Leonhardt makes an important distinction, often masked in the reporting of unemployment, between the official unemployment rate -- now at 9.5 percent -- and the rate of broader unemployment, which includes part-time workers seeking more hours and people who have stopped looking for jobs, altogether. That rate is over 16 percent nationally, and over 20 percent in states like Michigan and California.

Let's say you're an employer. With money tight, you've done a couple things to conserve cash on the payroll side: You've cut workers' hours, you've let some people go, and you've paid some part-timers to take their place. When the economy bounces back and you begin to see some space on your balance sheet for more paid hours, you're not necessarily going to start hiring full-time staffers immediately. After all, the economy could double-dip, or something more industry-specific could hurt your numbers in the short term. So you're first step might be to restore your staff to a more regular workweek. After all, average paid hours are by far at a 20 year low.

Then, you've got all these part timers, whose numbers are also at 20 year highs. What are you going to do with them, fire them? Maybe, if you only hired them part-time to do simple work for cheap. But you also might feel obliged to keep them on full-time. So before you start hiring, you might consider extending their hours, which means that this slack (see graph below) needs time to normalize.

And what of that market for unemployed people? It's staggering. Never in the last 50 years have this many people -- about six million -- lost their jobs this quickly. Take a look at the employment free fall:

In short: there is an incredible amount of slack in the jobs market that is going to take a long, long time to make up, unless consumer demand surges extraordinarily in the next few months. But the weak jobs market is, of course, also a weak consumer market. These are the same Americans working and buying, after all. With more part-time hours and more under- and unemployed workers, falling wages could have a negative long-term effect on consumer demand.