Economic Indicators | Jobs and Unemployment

Status quo is not good enough

Press release

The December 2012 employment situation report released this morning by the Bureau of Labor Statistics marks five years since the official start of the Great Recession in December 2007 and three and a half years since the official start of the recovery in June 2009. The numbers for December sustained the status quo; the labor market added 155,000 jobs, right in line with the 153,000 average of the first 11 months of the year, and the unemployment rate, at 7.8 percent, was unchanged from the revised November unemployment rate. The problem, of course, is that a status quo report in today’s labor market represents an ongoing jobs crisis.  The jobs deficit—the number of jobs lost since the recession officially began plus the number of jobs we should have added just to keep up with the normal growth in the potential labor force—remains nearly nine million. As the figure below shows, at December’s growth rate the labor market will not fill in that gap until the end of 2021.

MORE: State of Working America graphs with latest national employment and unemployment data

The next figure shows more directly that we’ve been seeing essentially the same report since the fall of 2010. The figure shows the monthly change in employment since December 2007. The straight line is simply the average since October 2010, 153,000 jobs added per month. It shows that, some month-to-month variablility aside, we been trudging along at roughly the same rate for more than two years.  Given that we need to add around 100,000 jobs per month simply to keep up with growth in the working-age popualtion, this kind of growth is not going to dig us out of our jobs hole of nearly nine million anytime soon (as the previous figure demonstrates).

Wages and hours

Average hourly wages increased by 7 cents in December and have risen at a 2.1 percent rate over the last year. This is roughly in line with inflation, meaning real wages are roughly flat over the last year, as persistent high unemployment has exerted strong downward pressure on wage growth.  The length of the average workweek increased in December to 34.5 hours, restoring hours to where they were earlier in the year (the hours measure has been unusually volatile in recent months).

Industry breakdowns

The public sector lost 13,000 jobs in December, falling to a new low of the recovery.  Since the recovery began three and a half years ago, the public sector has lost 645,000 jobs (losing 21,000 federal, 102,000 state, and 522,000 local jobs, with most of the local losses in education, which is basically K-12 public education). These losses represent an enormous drain on the recovery that was not weighing on earlier recoveries.

Temporary help services lost 600 jobs in December, which is not good news as employment in temporary help services is still below its pre-recession levels. Notably, if there were pent-up demand in the lead-up to the resolution of the so-called “fiscal-cliff,” we would have expected temporary help services employment to increase in December.

Retail trade declined by 11,300 in December, but that was expected payback for the outsized increase of 62,800 in November. Over the last year, retail added 14,100 jobs per month on average.

Health care added 44,500 jobs in December, an increase from its average growth of 30,600 per month in the prior three months but the improvement is likely just payback for the small November gain of 19,700. Restaurants and bars added 38,000 jobs in December, higher than the industry’s 22,900 average monthly gain of the prior three months.

In December, construction increased by 30,000 jobs, a big increase from the average growth rate of 4,700 jobs per month over the prior three months. Manufacturing increased by 25,000 jobs in December, also a big increase over its average loss of 1,300 per month over the prior three months.

Demographic breakdowns

Unemployment in December was 8.0 percent for those age 25 or older with only a high school education, and 3.9 percent for those age 25 or older with a college degree or more. While workers with higher levels of education have lower unemployment rates, all education categories have unemployment rates dramatically higher now than before the recession began, a trend running counter to the notion that there is high unemployment because employers are unable to find the highly credentialed workers that they need.

Considering additional breakdowns by age, race/ethnicity, and gender, we find that all major groups of workers have experienced substantial increases in unemployment over the Great Recession and its aftermath. However, young workers and racial and ethnic minorities have been and continue to be hit particularly hard.

  • In December, unemployment was 16.3 percent among workers age 16–24, 6.7 percent among workers age 25–54, and 5.9 percent among workers age 55 and older (up 4.6, 2.7, and 2.7 percentage points, respectively, since the start of the recession in December 2007).
  • Among workers younger than age 25 who are not enrolled in school, unemployment over the last year averaged 20.3 percent for those with a high school degree and 8.0 percent for those with a college degree (reflecting increases of 8.2 and 2.5 percentage points, respectively, over the annual average of 2007; 12-month averages are used here since seasonally adjusted data are not available for these series).
  • Unemployment in December was 14.0 percent for African American workers, 9.6 percent for Hispanic workers, and 6.9 percent for white workers (up 5.0, 3.3, and 2.5 percentage points, respectively, since the start of the recession).
  • Men saw a much larger increase in unemployment during the recession, but have seen relatively stronger improvements in the recovery. The unemployment rate reached its pre-recession low in late 2006 and early 2007, at 4.4 percent for men and 4.3 percent for women. Male unemployment peaked at 11.2 percent in October of 2009, and has since fallen to 7.9 percent. Female unemployment continued to rise for another year, peaking at 9.0 percent in November 2010; it since has fallen to 7.8 percent.


This report gives little hope that we are on a path to more robust job growth. To get back to the pre-recession unemployment rate in three years—by the end of 2015—would require adding around 330,000 jobs every month between now and then. In comparison, in 2012 we added an average of only 153,000 jobs every month. Expectations are that job growth much faster than this is at least a year off, particularly given the drag on economic growth due to contractionary fiscal policy, particularly the expiration of the payroll tax credit.

Research assistance was provided by Nicholas Finio and Natalie Sabadish

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