Labor & Employment Law

Without Job Creation Action, Job Levels Stagnant for Years

By Mike Hall

Even if the economy begins creating jobs at the fastest pace of job growth during the early 2000s, employment levels won?t  reach December 2007 levels?when the Bush recession began destroying nearly 11 million jobs?until 2014.

But even with that rate of job creation, according to a new report, because of the growth in the workforce, the unemployment rate will not fall back to pre-recession levels until 2021. A Center for Economic and Policy Research (CEPR) report, ?The Urgent Need for Job Creation,? shows the desperate need for government action on job creation:

Many lawmakers, policymakers and economic commentators do not appear to recognize the depth of the current labor-market recession.

During a press conference on the CEPR report, Sen. Al Franken (D-Minn.), who is a Senate sponsor of the Local Jobs for America Act (S. 3500 and H.R. 4812), said the report highlights the desperate need for action on job creation.

When I go back to my state and talk to folks, I see a lot of people really hurting and I see a lot of people who are out of work. We need this bill.

The bill would create or save more than 675,000 local community jobs and more than 250,000 education jobs. It would provide $75 billion over two years to local communities to hold off planned cuts or to hire back workers for local services who have been laid-off because of tight budgets and $24 billion to help states support 250,000 education jobs.

John Schmitt, a senior economist at CEPR and a co-author of the report, says:

The economy desperately needs action on job creation. At current and projected job creation rates, we will still be suffering from the effects of the downturn well into the next presidential term.

The report compares various job growth scenarios with the job loss seen in the current recession and projects when the lost jobs will be regained and when the unemployment rate will return to pre-recession levels in each case.

Even if job growth took off at the fast rates of the 1990s after the Bush I recession, jobs wouldn?t hit pre-recession levels until September 2012 and not enough new jobs would be created to return to the pre-recession unemployment rate until September 2014.

If the even faster growth rates of the mid-1970s and early-1980s are applied, the economy returns to December 2007 employment levels in November 2011 and pre-recession unemployment rates by October of 2012.

The Congressional Budget Office predicts job growth will fall between the two scenarios. According to the CEPR report:

This means that absent serious job creation policies, the economy will not reach pre-recession levels until well after the 2012 election cycle (June 2013) and not return to an unemployment rate near the pre-recession level until August of 2015.

Full post as published by AFL-CIO NOW BLOG on July 21, 2010 (boomark / email).