This month’s jobs report was widely celebrated for showing that—after adding 217,000 jobs in May 2014—the United States had finally returned to the December 2007 (pre-recession) level of employment. This is a useful comparative benchmark, underscoring the unusual depth and duration of this downturn: measured against other postwar business cycles (see graphic below), the 2007–9 downturn cost us a bigger share of jobs, and the subsequent recovery took much longer to gain them back.*
That it has taken a full six-and-half years to get back to where we were in December 2007 is striking. But as an actual measure of recovery or economic health, the pre-recession employment threshold means very little. The aggregate job numbers are silent as to the quality of jobs lost or gained: on balance, as the National Employment Law Project underscores, recessionary losses were steepest in higher wage industries, while recovery jobs have been concentrated in lower-wage industries. Across the recession and much of the recovery, rates of employment-based health coverage continued to fall. We have not so much “regained the jobs lost during the recession” as we have traded them in for ones that pay less and offer less security.
Meanwhile, the December 2007 jobs threshold has been rendered meaningless by over six years of economic and demographic change. Since the labor force has grown substantially over the last six-and-a-half years, the current rate of unemployment is still far above the pre-recession benchmark. The first goal, then, should be to return the December 2007 rate of unemployment—and by this measure [see graphic below], we’re still 2 million jobs in the hole.
This measure of the jobs deficit is incomplete, however, because the unemployment rate does not include those who have given up looking for work. If we set our goal at a return to pre-recession unemployment and labor-force participation rates, the jobs deficit swells to over 9.5 million.
But this still sets a low bar. Rates of employment and labor-force participation in December 2007 were not nearly as strong as they had been a decade earlier. If we aim for those “full employment” targets (the unemployment and labor-force participation rates of the late 1990s), we are running a deficit of a couple of million jobs before the recession even starts. From there, the lost jobs and missing workers pile up quickly, reaching—and plateauing at—a jobs deficit of over 11 million. Some recovery.