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.