The economy has made great strides since the recession began, but there is still work to be done

Today’s jobs report gives us an opportunity to compare how the economy is treating Americans today compared with December 2007, when the recession began. As the recovery has strengthened we’ve seen improvements in all measures of employment, unemployment, and wage growth. All measures indicate a consistent story—an economy on its way to full employment, but not there yet. Taking a data-driven approach to policymaking would mean continuing to push, keeping interest rates low and letting the economy recover for Americans across genders, races, ethnicities, and levels of educational attainment.

In December, the unemployment rate edged up slightly to 4.7 percent because of a small but positive increase in the labor force participation rate. The unemployment rate peaked at 10.0 percent during the recession, and at 4.7 percent it is now below where it was before the recession began (5.0 percent). Meanwhile, the unemployment rate for black workers hit 7.8 percent in December. This is its lowest point so far in the recovery, but it’s still slightly above its pre-recession low in August 2007 (7.6 percent). Likewise, the unemployment rate for Hispanic workers (5.9 percent) has stagnated for much of the year and remains significantly above its pre-recession low point of 4.7 percent in October 2006. The underemployment rate—which adds in workers who are part-time for economic reasons and those marginally attached—was 9.2 percent in December and still hasn’t reached its pre-recession level (8.8 percent). So, while the economy is the strongest it’s been in years, there are still a lot of workers sitting on the sidelines and underutilized, and a lot of communities that are not feeling the full extent of the recovery.

Two other important indicators, the prime-age employment-to-population ratio (EPOP) and nominal wage growth, are still far lower than would be expected in a stronger economy. Prime-age EPOP, the share of the population 25-54 years old with a job, has been one of the major indicators lagging behind in the recovery. As shown in the figure below, the prime-age EPOP has been slowly but fairly steadily improving since it bottomed out in 2010, hitting 78.2 percent in December. The graph also shows recent relevant benchmarks with which to judge progress on this measure. At 78.2 percent, it has exceeded the lowest point in the last two full business cycles, but has yet to hit the lowest mark of the last full business cycle. And, it remains far below its high points in both of the last two recessions. In a strong economy, we could expect a greater share of prime-working-age workers to actually have a job. If the economy continues to improve as it has over the last year, more people will be pulled off the sidelines and back into the labor force.

Figure A

Employment-to-population ratio of workers ages 25-54, 1989–2016

Employment-to-population ratio
Jan-1989 80.0
Feb-1989 79.9
Mar-1989 79.9
Apr-1989 79.8
May-1989 79.8
Jun-1989 79.8
Jul-1989 79.8
Aug-1989 79.9
Sep-1989 80.0
Oct-1989 79.9
Nov-1989 80.2
Dec-1989 80.1
Jan-1990 80.2
Feb-1990 80.2
Mar-1990 80.1
Apr-1990 79.9
May-1990 79.9
Jun-1990 79.8
Jul-1990 79.6
Aug-1990 79.5
Sep-1990 79.4
Oct-1990 79.4
Nov-1990 79.2
Dec-1990 79.0
Jan-1991 78.9
Feb-1991 78.9
Mar-1991 78.7
Apr-1991 79.0
May-1991 78.6
Jun-1991 78.7
Jul-1991 78.6
Aug-1991 78.5
Sep-1991 78.6
Oct-1991 78.5
Nov-1991 78.4
Dec-1991 78.3
Jan-1992 78.4
Feb-1992 78.2
Mar-1992 78.2
Apr-1992 78.4
May-1992 78.4
Jun-1992 78.5
Jul-1992 78.4
Aug-1992 78.4
Sep-1992 78.3
Oct-1992 78.2
Nov-1992 78.2
Dec-1992 78.2
Jan-1993 78.2
Feb-1993 78.1%  
Mar-1993 78.2
Apr-1993 78.2
May-1993 78.5
Jun-1993 78.6
Jul-1993 78.6
Aug-1993 78.8
Sep-1993 78.6
Oct-1993 78.7
Nov-1993 79.0
Dec-1993 79.0
Jan-1994 78.9
Feb-1994 78.9
Mar-1994 78.9
Apr-1994 79.0
May-1994 79.2
Jun-1994 78.8
Jul-1994 79.1
Aug-1994 79.2
Sep-1994 79.6
Oct-1994 79.6
Nov-1994 79.8
Dec-1994 79.8
Jan-1995 79.7
Feb-1995 80.0
Mar-1995 79.9
Apr-1995 79.8
May-1995 79.7
Jun-1995 79.5
Jul-1995 79.7
Aug-1995 79.6
Sep-1995 79.8
Oct-1995 79.8
Nov-1995 79.7
Dec-1995 79.7
Jan-1996 79.8
Feb-1996 79.9
Mar-1996 79.9
Apr-1996 79.9
May-1996 80.0
Jun-1996 80.1
Jul-1996 80.4
Aug-1996 80.5
Sep-1996 80.4
Oct-1996 80.6
Nov-1996 80.5
Dec-1996 80.5
Jan-1997 80.5
Feb-1997 80.4
Mar-1997 80.6
Apr-1997 80.7
May-1997 80.6
Jun-1997 80.9
Jul-1997 81.1
Aug-1997 81.3
Sep-1997 81.1
Oct-1997 81.1
Nov-1997 81.0
Dec-1997 81.0
Jan-1998 81.0
Feb-1998 81.0
Mar-1998 81.0
Apr-1998 81.1
May-1998 81.0
Jun-1998 81.0
Jul-1998 81.1
Aug-1998 81.2
Sep-1998 81.3
Oct-1998 81.1
Nov-1998 81.2
Dec-1998 81.3
Jan-1999 81.8
Feb-1999 81.5
Mar-1999 81.3
Apr-1999 81.3
May-1999 81.4
Jun-1999 81.4
Jul-1999 81.2
Aug-1999 81.3
Sep-1999 81.3
Oct-1999 81.5
Nov-1999 81.6
Dec-1999 81.5
Jan-2000 81.8
Feb-2000 81.8
Mar-2000 81.7
Apr-2000 81.9%  
May-2000 81.5
Jun-2000 81.5
Jul-2000 81.3
Aug-2000 81.1
Sep-2000 81.1
Oct-2000 81.1
Nov-2000 81.3
Dec-2000 81.4
Jan-2001 81.4
Feb-2001 81.3
Mar-2001 81.3
Apr-2001 80.9
May-2001 80.8
Jun-2001 80.6
Jul-2001 80.5
Aug-2001 80.2
Sep-2001 80.2
Oct-2001 79.9
Nov-2001 79.7
Dec-2001 79.8
Jan-2002 79.6
Feb-2002 79.8
Mar-2002 79.6
Apr-2002 79.5
May-2002 79.4
Jun-2002 79.2
Jul-2002 79.1
Aug-2002 79.3
Sep-2002 79.4
Oct-2002 79.2
Nov-2002 78.8
Dec-2002 79.0
Jan-2003 78.9
Feb-2003 78.9
Mar-2003 79.0
Apr-2003 79.1
May-2003 78.9
Jun-2003 78.9
Jul-2003 78.8
Aug-2003 78.7
Sep-2003 78.6%
Oct-2003 78.6
Nov-2003 78.7
Dec-2003 78.8
Jan-2004 78.9
Feb-2004 78.8
Mar-2004 78.7
Apr-2004 78.9
May-2004 79.0
Jun-2004 79.1
Jul-2004 79.2
Aug-2004 79.0
Sep-2004 79.0
Oct-2004 79.0
Nov-2004 79.1
Dec-2004 78.9
Jan-2005 79.2
Feb-2005 79.2
Mar-2005 79.2
Apr-2005 79.4
May-2005 79.5
Jun-2005 79.2
Jul-2005 79.4
Aug-2005 79.6
Sep-2005 79.4
Oct-2005 79.3
Nov-2005 79.2
Dec-2005 79.3
Jan-2006 79.6
Feb-2006 79.7
Mar-2006 79.8
Apr-2006 79.6
May-2006 79.7
Jun-2006 79.8
Jul-2006 79.8
Aug-2006 79.8
Sep-2006 79.9
Oct-2006 80.1
Nov-2006 80.0
Dec-2006 80.1
Jan-2007 80.3%  
Feb-2007 80.1
Mar-2007 80.2
Apr-2007 80.0
May-2007 80.0
Jun-2007 79.9
Jul-2007 79.8
Aug-2007 79.8
Sep-2007 79.7
Oct-2007 79.6
Nov-2007 79.7
Dec-2007 79.7
Jan-2008 80.0
Feb-2008 79.9
Mar-2008 79.8
Apr-2008 79.6
May-2008 79.5
Jun-2008 79.4
Jul-2008 79.2
Aug-2008 78.8
Sep-2008 78.8
Oct-2008 78.4
Nov-2008 78.1
Dec-2008 77.6
Jan-2009 77.0
Feb-2009 76.7
Mar-2009 76.2
Apr-2009 76.2
May-2009 75.9
Jun-2009 75.9
Jul-2009 75.8
Aug-2009 75.6
Sep-2009 75.1
Oct-2009 75.0
Nov-2009 75.2
Dec-2009 74.8
Jan-2010 75.1
Feb-2010 75.1
Mar-2010 75.1
Apr-2010 75.4
May-2010 75.1
Jun-2010 75.2
Jul-2010 75.1
Aug-2010 75.0
Sep-2010 75.1
Oct-2010 75.0
Nov-2010 74.8%
Dec-2010 75.0
Jan-2011 75.2
Feb-2011 75.1
Mar-2011 75.3
Apr-2011 75.1
May-2011 75.2
Jun-2011 75.0
Jul-2011 75.0
Aug-2011 75.1
Sep-2011 74.9
Oct-2011 74.9
Nov-2011 75.3
Dec-2011 75.4
Jan-2012 75.5
Feb-2012 75.5
Mar-2012 75.7
Apr-2012 75.7
May-2012 75.7
Jun-2012 75.6
Jul-2012 75.6
Aug-2012 75.7
Sep-2012 76.0
Oct-2012 76.1
Nov-2012 75.8
Dec-2012 76.0
Jan-2013 75.6
Feb-2013 75.8
Mar-2013 75.8
Apr-2013 75.9
May-2013 76.0
Jun-2013 75.9
Jul-2013 76.0
Aug-2013 75.9
Sep-2013 76.0
Oct-2013 75.6
Nov-2013 76.1
Dec-2013 76.2
Jan-2014 76.4
Feb-2014 76.4
Mar-2014 76.6
Apr-2014 76.5
May-2014 76.4
Jun-2014 76.8
Jul-2014 76.7
Aug-2014 76.8
Sep-2014 76.8
Oct-2014 77.0
Nov-2014 77.0
Dec-2014 77.1
Jan-2015 77.1
Feb-2015 77.2
Mar-2015 77.2
Apr-2015 77.2
May-2015 77.2
Jun-2015 77.2
Jul-2015 77.1
Aug-2015 77.2
Sep-2015 77.3
Oct-2015 77.3
Nov-2015 77.5
Dec-2015 77.5
Jan-2016 77.7
Feb-2016 77.8
Mar-2016 78.0
Apr-2016 77.7
May-2016 77.8
Jun-2016 77.8
Jul-2016 78.0
Aug-2016 77.8
Sep-2016 78.0
Oct-2016 78.2
Nov-2016 78.2
Dec-2016 78.2%
ChartData Download data

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Source: EPI analysis of Bureau of Labor Statistics' Current Population Survey public data

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Year-over-year nominal hourly wages grew at 2.9 percent in December, the fastest rate of growth so far in the recovery. While the pace of wage growth has improved as the economy strengthens, it is still below levels consistent with the Fed’s target inflation rate and trend productivity growth. Wage growth is simply not putting worrisome upward pressure on inflation. If this is the indicator the Federal Reserve is most closely eyeing when it decides whether or not to raise interest rates, then the data shows they should hold off. The labor market—and surely the workers in it—can withstand stronger wage growth for a sustained period of time.

Figure B

Nominal wage growth has been far below target in the recovery: Year-over-year change in private-sector nominal average hourly earnings, 2007–2017

All nonfarm employees Production/nonsupervisory workers
Mar-2007 3.59% 4.11%
Apr-2007 3.27% 3.85%
May-2007 3.73% 4.14%
Jun-2007 3.81% 4.13%
Jul-2007 3.45% 4.05%
Aug-2007 3.49% 4.04%
Sep-2007 3.28% 4.15%
Oct-2007 3.28% 3.78%
Nov-2007 3.27% 3.89%
Dec-2007 3.16% 3.81%
Jan-2008 3.11% 3.86%
Feb-2008 3.09% 3.73%
Mar-2008 3.08% 3.77%
Apr-2008 2.88% 3.70%
May-2008 3.02% 3.69%
Jun-2008 2.67% 3.62%
Jul-2008 3.00% 3.72%
Aug-2008 3.33% 3.83%
Sep-2008 3.23% 3.64%
Oct-2008 3.32% 3.92%
Nov-2008 3.64% 3.85%
Dec-2008 3.58% 3.84%
Jan-2009 3.58% 3.72%
Feb-2009 3.24% 3.65%
Mar-2009 3.13% 3.53%
Apr-2009 3.22% 3.29%
May-2009 2.84% 3.06%
Jun-2009 2.78% 2.94%
Jul-2009 2.59% 2.71%
Aug-2009 2.39% 2.64%
Sep-2009 2.34% 2.75%
Oct-2009 2.34% 2.63%
Nov-2009 2.05% 2.67%
Dec-2009 1.82% 2.50%
Jan-2010 1.95% 2.61%
Feb-2010 2.00% 2.49%
Mar-2010 1.77% 2.27%
Apr-2010 1.81% 2.43%
May-2010 1.94% 2.59%
Jun-2010 1.71% 2.53%
Jul-2010 1.85% 2.47%
Aug-2010 1.75% 2.41%
Sep-2010 1.84% 2.30%
Oct-2010 1.88% 2.51%
Nov-2010 1.65% 2.23%
Dec-2010 1.74% 2.07%
Jan-2011 1.92% 2.17%
Feb-2011 1.87% 2.12%
Mar-2011 1.87% 2.06%
Apr-2011 1.91% 2.11%
May-2011 2.00% 2.16%
Jun-2011 2.13% 2.00%
Jul-2011 2.26% 2.31%
Aug-2011 1.90% 1.99%
Sep-2011 1.94% 1.93%
Oct-2011 2.11% 1.77%
Nov-2011 2.02% 1.77%
Dec-2011 1.98% 1.77%
Jan-2012 1.75% 1.40%
Feb-2012 1.88% 1.45%
Mar-2012 2.10% 1.76%
Apr-2012 2.01% 1.76%
May-2012 1.83% 1.39%
Jun-2012 1.95% 1.54%
Jul-2012 1.77% 1.33%
Aug-2012 1.82% 1.33%
Sep-2012 1.99% 1.44%
Oct-2012 1.51% 1.28%
Nov-2012 1.90% 1.43%
Dec-2012 2.20% 1.74%
Jan-2013 2.15% 1.89%
Feb-2013 2.10% 2.04%
Mar-2013 1.93% 1.88%
Apr-2013 2.01% 1.73%
May-2013 2.01% 1.88%
Jun-2013 2.13% 2.03%
Jul-2013 1.91% 1.92%
Aug-2013 2.26% 2.18%
Sep-2013 2.04% 2.17%
Oct-2013 2.25% 2.27%
Nov-2013 2.24% 2.32%
Dec-2013 1.90% 2.16%
Jan-2014 1.94% 2.31%
Feb-2014 2.14% 2.45%
Mar-2014 2.18% 2.40%
Apr-2014 1.97% 2.40%
May-2014 2.13% 2.44%
Jun-2014 2.04% 2.34%
Jul-2014 2.09% 2.43%
Aug-2014 2.21% 2.48%
Sep-2014 2.04% 2.27%
Oct-2014 2.03% 2.27%
Nov-2014 2.11% 2.26%
Dec-2014 1.82% 1.87%
Jan-2015 2.23% 2.01%
Feb-2015 2.06% 1.71%
Mar-2015 2.18% 1.90%
Apr-2015 2.34% 2.00%
May-2015 2.34% 2.14%
Jun-2015 2.04% 1.99%
Jul-2015 2.29% 2.04%
Aug-2015 2.32% 2.08%
Sep-2015 2.40% 2.13%
Oct-2015 2.52% 2.36%
Nov-2015 2.39% 2.21%
Dec-2015 2.60% 2.61%
Jan-2016 2.46% 2.45%
Feb-2016 2.34% 2.40%
Mar-2016 2.37% 2.44%
Apr-2016 2.53% 2.53%
May-2016 2.48% 2.33%
Jun-2016 2.64% 2.52%
Jul-2016 2.72% 2.57%
Aug-2016 2.47% 2.42%
Sep-2016 2.67% 2.65%
Oct-2016 2.74% 2.40%
Nov-2016 2.53% 2.40%
Dec-2016 2.81% 2.54%
Jan-2017 2.48% 2.44%
ChartData Download data

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*Nominal wage growth consistent with the Federal Reserve Board's 2 percent inflation target, 1.5 percent productivity growth, and a stable labor share of income.

Source: EPI analysis of Bureau of Labor Statistics Current Employment Statistics public data series

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All told, it’s clear that the next president is inheriting an economy much stronger than it was at the start of the previous administration—but there is still more work to do. The Federal Reserve should keep its foot off the brake until wage growth picks up, and Congress and the president should forgo budget cuts and austerity measures. Not only would cuts to social safety net programs hurt the people who rely on them to make ends meet to put a roof over their heads, to put food on the table, and get the health care they need, we’ve also seen austerity at all levels of government put a drag on the economy.

Working families need good jobs, decent wages, and reliable benefits—which means we need policymakers to make returning the country to full employment a top priority. We need to keep our eye on solutions at the scale of the problem, not piecemeal strategies. That means monetary and fiscal policy that sustains job growth and gets us back to full employment and stronger wage growth. To improve living standards to the vast majority Americans, policymakers need to strengthen the safety net, bolster labor standards, forgo austerity, and ensure that interest rates stay low so that the growing economy reaches all.