I’m not sure it’s sunk in yet within the political class (outside of economists) how horrible the prospects are for bringing the unemployment rate back to pre-Great Recession levels any time soon. And by soon, I don’t mean November 2010. We’re talking more like November 2015 or November 2020.
Here’s a chart from the Brookings Institution (via Ezra) that gives you some idea of the mammoth hill the economy has to climb to generate enough jobs to take up the slack in the labor market:
The grim reality was brought home to me last month at a New America Foundation event where Laura D’Andrea Tyson, who chaired the Council of Economic Advisers under President Clinton, addressed the poor long-term prospects for closing the jobs gap. In her charming, bubbly way, she managed to kick everyone at the lunch in the gut with the numbers.
The “jobs gap” is the sum of the jobs lost during the recession plus the new additions to the ever-expanding labor force (which is substantial, between 125,000 and 144,000 a month, Tyson said). She assumed a jobs gap of 11 million jobs. The chart above assumes 11.3 million.
“If you had net job growth of 200,000 a month, net job growth, it would take 12 years to close, to get that 11 million,” Tyson said. “Okay, with net job growth of 350,000 a month, it’ll take four years. What’ve we got right now? Well, for the last three months of this year, private sector jobs have been growing at 140,000 a month.”
Unless something changes — and the deeply troubling current emphasis on deficit reduction suggests nothing will — we’re looking at a decade or more of chronically high unemployment. It’s a situation that is not sustainable economically or politically.
