Excellent graphic from David Leonhardt summarizes the job market challenge for the US economy.
The economy needs to add atleast 125,000 jobs per month to merely keep up with the workforce population growth. Presently, government jobs are falling and private sector jobs growth is stagnant. The economy would need to add 9.4 million jobs to reduce the unemployment rate to the "normal" 6%. If the economy adds 200,000 jobs a month (itself higher than the current additions), then the 'normal' will be achieved well after 2020. At 250,000 job additions a month, the 6% rate will be reached only after 2016, while at 300,000 additions it will take till mid-2014 to reach the 'normal'.
Update 1 (7/1/2011)
The December 2010 jobs market report has little cause for cheer. The economy added just 103,000 jobs in December and the unemployment rate was at 9.4%. The so-called real unemployment rate, which includes those workers who are discouraged or have given up looking for work, stands at 16.7 percent.
The percentage of the unemployed who have been without work 27 weeks or longer edged up last month to 44.3 percent, virtually unchanged from a year ago. See this and this. See these excellent graphics from Chad Stone.
Update 1 (15/1/2011)
Floyd Norris has this graphic which shows that the recession has induced more people above the age group of 55 to work, even as it has reduced the percentage of those below 55 working. Thirty years ago, one in seven jobs in the United States was held by a person who was 55 or older. Today the proportion is one in five.
Changing demographics can explain part of the change. As baby boomers age, the number of people over 55 has increased. But another reason for the change seems to be that fewer older workers who have jobs are willing to retire while fewer younger people are even looking for work. The fact that a lower proportion of people under 25 are in the labor force — either working or looking for work — could reflect a decision by more of them to further their education.
Update 2 (5/2/2011)
The January jobs report shows that the US economy added 36,000 jobs on net in January and its unemployment rate fell to 9%, possibly because many people stopped looking for jobs and dropped off the labor force. The private sector added 50,000 jobs, while government shed 14,000 jobs.
A broader measure of unemployment — which includes those whose hours have been cut, those who are working part time because they could not find full-time jobs, and those so discouraged that they have given up on the search — was 16.1%, down from 16.7% in December. That left 13.9 million people still out of work. The unemployment rate among people with less than a high school diploma was 14.2%, while the rate among those with a bachelor’s degree or higher was 4.2%. The number of people who had been out of work for six months or more eased to 6.2 million from 6.4 million.
See this, this, this, and this.
Update 3 (26/2/2011)
The big worry for the US is with the details of the unemployment - massive spurt in long-term unemployed and the disproportionately higher share of those with low education who are unemployed.
Update 4 (7/3/2011)
Mark Thoma has two posts on how long it will take for unemployment to return to normalcy under two different assumptions. Both make for bleak reading.
In the meantime, the February jobs report had something to cheer, with total jobs added being 192,000 (up from a gain of just 63,000 in January), primarily through the private sector, and unemployment rate falling to 8.9%. The industries with the biggest gains included construction (again, partly because of weather effects), manufacturing, professional and business services, and health care and social assistance. The losers were state and local governments, which have been shedding more and more workers as their budget troubles get worse.
Since the downturn began in December 2007, the economy has shed, on net, about 5.4 percent of its nonfarm payroll jobs. And that doesn’t even account for the fact that the working-age population has continued to grow, meaning that if the economy were healthy we should have more jobs today than we had before the recession. However, the average duration of unemployment climbed to 37.1 weeks.