Even At 321,000 Jobs a Month, It Will Be Nearly Two Years Before the Economy Looks Like 2007

Dramatically falling employment in the Great Recession and its aftermath has left us with a jobs shortfall of 5.8 million—that’s the amount of jobs needed to keep up with growth in the potential labor force. Each year, the population keeps growing, and along with it, the number of people who could be working. To get back to the same labor market we had in 2007, we need to not only make up the jobs we lost, but gain enough jobs to account for this growth.

The chart below projects out the potential labor force into the future. We ran a variety of scenarios to determine how many jobs we would need to create each month to catch up to that line. The reality is that at November’s pace of job growth—which was an above average month—it will take until October 2016 to hit the employment level needed to return the economy to the labor market health that prevailed in 2007.

Yes, the jobs growth last month is good news, and I’m optimistic that we will continue to see job growth that strong or stronger in the upcoming months. But, it’s also higher than we’ve seen lately and could get revised downward next month. If we were to take the average monthly job growth over the last six months, we wouldn’t return to pre-recession labor market health until July 2017.

On the other hand, if we want to return to the labor market health that prevailed in 2007 much sooner, say, by creating 450,000 jobs per month, we would get there in March 2016. So, yes, 321,000 is a nice surprise, however, between the jobs gap and the sluggish wage growth, it is clear that we are fall from a full recovery.

  • benleet

    The age 25 to 54 employment to population ratio dropped from about 80% to 75% between 2008 and 2010, and now we are 40% back to 77%. The 80% level was a little above the 20 year average level for 1988 to 2008. Call it a 40% recovery after almost 5 and a half years. Just projecting the slope of the curve says about 6 to 8 years before we approach 80% again. The CBO projects the “potential” workforce in your model. It may be an optimistic model, that is, the potential number of willing workers may be greater. In April 2001 the ratio was 81.9%. Why not aim for the same ratio as then? Then full recovery is further out.