The June jobs report shows the unemployment level remained unchanged, at 8.2 percent. And it’s not just the April and June reports that look bad. The unemployment rate has been above 8 percent for the last 41 months. Millions continue to struggle trying to find full-time work, settling on a part-time job or just giving up all together. The big problem, not just for President Obama, but for whoever ends up in the White House in January of 2013 -- and probably 2017 for that matter -- is that if nothing is done, things probably won’t get much better for some time to come.
My CEPR colleagues John Schmitt and Tessa Conroy pointed out back in 2010 that the economy was in a pretty deep ditch. Looking at job creation under different scenarios, they concluded that even at a moderately fast pace of job creation, the economy won’t return to the levels it should be at until sometime in 2021.
A recent chart from the University of Iowa’s Colin Gordon sheds further light on the hole the economy is in by comparing the rate of recovery from recessions dating back to 1948.
As can be seen in the chart, the number of jobs lost and the duration of this recovery are significantly worse than the aftermath of any of the most recent recessions.
This isn’t to say that nothing can be done to speed up the current recovery. As EPI’s Josh Bivens wrote last month, the government could “…finance job-creating measures like aid to distressed households and states and infrastructure investment”. Another option is work-sharing, in which employers cut back on hours but unemployment benefits make up half the difference in lost pay. Either way, one thing is clear: if nothing is done, it will take years for the economy to create enough jobs to get back to its potential.