What To Watch On Jobs Day: Returning to Pre-recession Employment in the Private Sector is Not That Great

Total employment in the U.S. labor market is currently more than 600,000 jobs below where it was when the Great Recession officially started in December 2007, and it likely won’t surpass its December 2007 level for several months.

But private sector employment is another story. The private sector is currently “only” 126,000 jobs below where it was when the Great Recession started, which means it is poised to surpass its pre-recession peak when the March jobs numbers are released on Friday.

That makes this a good time to note that re-attaining pre-recession employment levels is a pretty meaningless benchmark economically. Because the working-age population (and with it, the potential labor force) is growing all the time, the private sector should have added millions of jobs over the last six-plus years just to hold steady. That means that even when the pre-recession employment level is re-attained, there will still be a huge jobs gap. Every month when the employment numbers are released, we update the total gap in the labor market (which includes both the public and private sector). The figure below shows that gap just for the private sector, with a current shortfall of 5.9 million jobs. When the March numbers are released on Friday, that gap may drop to 5.8 or even 5.7 million, but we are still far, far from healthy labor market conditions.

  • benleet

    Since Dec. 2000 when private sector employment was at a high and the employment to population ratio was at a high (64.4% vs today’s 58.8%), 31.993 million have entered the “working age” population. One might have predicted about 60% of them to have found work (or you might have predicted 64.4%), about 19 million. Mostly in the private sector, about 85% or 16.1 million, but only 3.7 million private sector jobs have been created over 14 years. Less than a quarter of the expected amount. I don’t disagree with the numbers in this article, I just thought to extend the story back 14 years.

  • JohnnyCalSuperPal

    THANK YOU! I was beginning to think there were no honest journalists left.
    “Wow! We’ve regained all those jobs we lost 6 years ago. Everything is rosy again!”
    But, wait,… how many (net new) jobs does the US normally create in a year? About 2M you say? So, doesn’t that mean we’re still 10-12M short?
    Why does no one ask this question?
    Thanks again!