The Slow Slog Toward ‘Full’ Employment
The current job-creation streak is one of the longest on record. Is that a good thing or a sign of trouble?
When President Barack Obama leaves office, one of the greatest economic achievements of his presidency—at least according to his own administration—will be having presided over what is now the longest stretch of job creation on record. There are, of course, some caveats, but at more than 73 months, the streak surpasses earlier periods from the 1980s and 1990s. But this isn’t entirely a good thing.
Part of the reason the upward climb has stretched on for so long is just that the low-point—the recession—was so low. From the nadir of the Great Recession, employment took longer to hit its pre-recession peak than it did during any of the last three economic recoveries: 11 months after the recession of the early 1980s, 23 months after the one in the 1990s, 39 months in the early aughts, and a lengthy 51 months following the Great Recession, according to the Economic Policy Institute.
And while the economy has added jobs, every month, for a really long time, most of the time those gains—compared to monthly gains during previous post-recession periods—were middling, rarely spiking above 300,000. The result was a prolonged period of very high unemployment that is strikingly different than the rapid improvement in unemployment seen after the recession of the 1980s, which many say is the most comparable recession in recent decades. Michael Madowitz, an economist at the left-leaning Center for American Progress describes it like this: The recession of the 1990s was like a bad cold. The 1980s downturn was like the flu. But the Great Recession was like pneumonia. “Now, things look really good,” he says. “But it has also been this really long slog.”
One reason for those somewhat middling numbers is that the jobs that were added were largely restricted to only one portion of the job market, the private sector. That, according to Madowitz, is unprecedented. According to the Congressional Research Service, from 2010 to 2013, the private sector added around 6.7 million jobs, while the public sector lost around 626,000. “I’d love to believe that we've made some great reform that’s made the economy super efficient for the private sector,” Madowitz says. “But I think it’s more about the fact that state governments get so much of their money from property, state, and local taxes. Because of the housing crash that’s just been very slow to rebound.” That meant that hiring of many public-sector workers, such as teachers, has remained sluggish as states try to keep a tight reign on budgets. In addition, some say that the Republican push for austerity in the name of not adding to the national debt prevented greater federal stimulus, and damped the ability to create jobs when they were most needed.
All of that said, it’s true that things look better now: Unemployment is back to pre-recession levels, there are signs that public-sector hiring may pick up, and, for the first time in years, workers are enjoying real wage gains. And yet, whoever enters the Oval Office in January won’t have it easy. Though there are signs of progress in many of the areas economists use to measure a healthy economy, other hallmarks still aren’t quite there. Labor-force participation, for instance, remains troublingly low and productivity isn’t growing. In the end, the conundrum of a job market that continues to grow while American families continue to struggle may mean that the existing means of measuring the health of the labor market aren’t sufficient.