The U.S. recession that started at the end of 2007 lasted about 18 months, give or take a few months.
Recovering the 8.4 million jobs lost in the downturn, however, could take the better part of a decade, some economists predict.
The nation is closer to 11 million jobs in the red, accounting for the jobs needed to keep pace with the expanding population, estimates Heidi Shierholz, a labor economist with the Economic Policy Institute in Washington, D.C.
“The level of growth needed to get us out of the hole we are in is so enormous,” she said.
A good six months into this recovery, the U.S. is still losing jobs, although Colorado employers appear to have added jobs in recent months.
“It is already another jobless recovery, and I think it will continue to be that way certainly through this year,” said Paul Kasriel, chief economist with Northern Trust.
From the 1990s on, recoveries have become increasingly “jobless,” with longer periods of time needed to recoup the previous highs in employment.
The 2001 recession was comparatively mild, lasting eight months and with gross domestic product actually increasing a little. Despite that, the number of non-farm jobs fell 2 percent and the old high took four years to reach.
Nearly a decade later, the U.S. unemployment rate still hasn’t gotten back to the levels of below 4 percent seen in 2000.
The recent downturn, measured by the percentage of jobs lost, has been three times as severe. So, does that mean the recovery in jobs will take three times as long, or 12 years?
Experts see a long, hard slog
Economists warn against making such straight-line comparisons, but many call for a long, hard slog that will diminish living standards for many families.
Global competition, which is forcing employers to do more with less, and the greater importance of the service sector are two key reasons job gains have become scarcer to obtain after each successive downturn.
“We are simply seeing a world where in order to compete, it is necessary to cut costs,” said A. Gary Shilling, a veteran economist based in New Jersey.
Recessions before the 1990s often were driven by inventory corrections. Manufacturers would lay off workers and then bring them back once imbalances were corrected.
Workers laid off in the past three recessions have found limited job opportunities to come back to.
“In service industries, layoffs are more likely to be permanent,” said Bill Kendall, president of the Center for Business & Economic Forecasting in Denver.
Two of every five unemployed workers have been jobless for six months or more, a level unheard of in past recessions. For every current opening, there are six job hunters, Shierholz said.
Another way to look at the job situation is the percentage of the 16-and-older population employed.
Back in April 2000, 64.7 percent of the U.S. population was employed, the high mark. But in January, that rate stood at 58.4 percent, a level last seen in October 1983.
Job level regained by 2014?
As for Colorado, Kendall estimates the state could see the share of the population employed regain 2007 levels by 2014, assuming the state economy can consistently add jobs at a 3 percent pace.
But coming out of the 2001 recession, the growth rate was a more modest 2 percent. A repeat performance would mean Colorado never regains the participation seen in 2007.
Several drags are slowing job gains in this recovery. For one, workers need time to move out of declining segments of the economy — finance and construction — and retrain for emerging areas.
Another headwind is the time needed to repair damage to banks and other financial institutions. Faced with mounting losses on commercial real estate loans, banks are less willing and able to lend.
Small businesses, which account for nearly two-thirds of job growth in the U.S., complain they are starved for capital.
Assuming population growth of 1 percent and productivity growth of 2 percent, the U.S. economy will need to grow at 3 percent a year just to keep the unemployment rate from rising.
But productivity, a measure of efficiency, has grown at above 6 percent the past three quarters, which helps explain why the 5.9 percent GDP growth in the fourth quarter didn’t result in a net increase in jobs.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
