What to Watch on Jobs Day: An All-time High of an Indicator That is Almost Always Rising

It is very likely that when the jobs numbers are released tomorrow morning, we will learn that the total number of jobs in the U.S. labor market surpassed its pre-recession peak.  I predict you will see many headlines along the lines of “U.S. Employment at All-Time High.”

It is difficult to exaggerate how not a big deal this is. Total employment is almost always rising, as the figure below shows. An all-time high of something that is almost always rising is just not that interesting.

Furthermore, it is an utterly meaningless benchmark economically. Because the working-age population (and with it, the potential labor force) is growing all the time, we should have added millions of jobs over the last six-plus years just to hold steady. That means that when we get back to the prerecession employment level, there will still be a huge gap in the labor market. We currently have a gap in the labor market of 7.1 million jobs. When the numbers are released on Friday, that gap will likely drop to 7.0 million. We are far, far from healthy labor market conditions.

gap excerise since 1939


  • Dane Grove

    Hi there and thanks for your perspective. Question: Many economist share your opinions around how we track the job economy. So why aren’t we adjusting / changing or generally updating how we look at those numbers?

  • stichmo

    I agree that recovering all of the jobs lost as a result of the Great Recession of December 2007 to June 2009 is a minor milestone and not a cause for great celebration. However, it does show that the economy is back moving in the right direction after losing private sector jobs during the eight years of the Bush administration.

    I disagree with you that the increase in the 16 and over population means we are still short over 7 million jobs from full recovery. When you define “working age” to include 95 year olds in nursing homes you give the term “working age” no meaning. Yes the population has risen in the last six years, but the population growth has been in the 55 and older age group, with most of the growth in the 65 and older age group. In other words, the population growth has primarily been in demographic groups that most of us don’t consider “working age.” Most people 65 and older don’t work and don’t want to work.

    A better measure of how many jobs we need to add to reach full recovery is the increase in the number of people who say they want a job. This is the increase in the labor force plus the increase in the number of people marginally attached to the labor force since we started losing jobs in early 2008. Since January 2008 the labor force has increased by 1,550,000 people (BLS Series LNS11000000) and the number of marginally attached has increased by 401,000 people (BLS Series LNU05026642). So the number of additional jobs we need to reach full recovery is about two million not seven million.

  • tarajunky

    We lost 8.7 million jobs, and we are still 7.1 million jobs short. So since the recession officially ended in June 2009 (5! years ago now), the net monthy job growth has been 1.6 million / 60 months = 26k jobs per month.

    Worst recovery ever, worst President ever.

  • Larry Signor

    You have made a point which is fairly unique among economists but very appropriate. Meaningless benchmarks do not help solve the problem, they merely obscure it. Excellent post.