Looking Beyond the Conventional Wisdom on Unemployment
Sunday, April 03, 2011
Bob Greenstein, the president of the Center on Budget and Policy Priorities, is a long time member of the Share Our Strength board and can always be counted on to dig deep beyond the conventional wisdom to explain economic developments impacting the most vulnerable and voiceless. And so I turned to the Center’s website after the release of the March statistics on the drop in unemployment. Sure enough, their analysis, by chief economist Chad Stone, provides a more sober view, including these points taken verbatim from his statement:
We have to create over 7.2 million jobs just to get payroll employment back to its level at the start of the recession in December 2007. At March’s rate of 216,000 jobs a month, that would take almost three years.
Unfortunately, the economy seems to be losing momentum, not gaining it. We need economic growth of 3½ to 4 percent a year to close the jobs deficit in any reasonable amount of time. The economy grew at a 3.1 percent annual rate in the fourth quarter and likely grew less than that in the first quarter of this year.
The recession and lack of job opportunities drove many people out of the labor force, and we have yet to see the return to labor force participation (working or actively looking for work) that marks a strong jobs recovery. The labor force participation rate (the share of the population aged 16 and over working or looking for work) remained depressed at 64.2 percent, the lowest it has been since 1984. Recent declines in the unemployment rate would be more encouraging if they were accompanied by a rising labor force participation rate.
The share of the population with a job, which plummeted in the recession to levels last seen in the mid-1980s, was 58.5 percent in March. Prior to the current slump, the last time it was lower was October 1983.
It remains very difficult to find a job. 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 15.7 percent in March, not much below its all-time high of 17.4 percent in October 2009 in data that go back to 1994. By that measure, more than 24 million people are unemployed or underemployed.
Hopeful news can play an important role in economic recovery and the most recent unemployment stats provide some. But the clear-eyed view provided by the Center shows how far we still have to go.
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