After the longest recession in three generations, the U.S. economy has finally regained the number of jobs it had at the previous peak in 2008.
The Labor Department announced Friday morning that the U.S. economy added 217,000 jobs and that the unemployment rate held firm at 6.3%, putting the total number of jobs in the economy at 138,469,000. That surpasses the previous peak of 138,365,000 in January 2008.
Of course, this represents only a symbolic milestone, as the population has continued to expand in the intervening six years. That's why, for instance, the unemployment rate in January 2008 was 5% compared to 6.3% today. But it's an interesting milestone nonetheless, as it offers an opportunity to reflect on the depth of the recent recession and its absolutely devastating effect on the job market in America.
This chart from Calculated Risk shows the arcs of job recoveries after each recession since World War II.
As you can see, recoveries have been less vigorous after each successive recession, and this time around, it took the U.S. a full six years to recover the jobs that were lost.
The question now is whether the pace of job gains will quicken in the coming months, and whether the jobs we do gain are the sort of high paying ones that can really bring the economy back to full strength.
One shouldn't draw too many conclusions from one job report, but one heartening statistic is that over the past three months job growth has averaged 234,000, compared with the 12-month average of 197,000, which suggest that the pace of the recovery may be accelerating.
Another positive note in Friday's jobs report: we are continuing to see modest growth in wages overall. Average hourly earnings increased by $.05 per hour, and have risen 2.1% over the past year. While that may not sound like much, it does mean that wages are growing faster than inflation, a trend that will need to continue for the economy to return to full strength.
The report wasn't all good news, though. While long-term unemployment has declined over the past year, there are still over 3 million Americans who have been without a job for more than 26 weeks, and these people make up 34.6% of the unemployed, well above the normal rate. Furthermore, there's reason to believe that much of the decline in this group over the past year is due to people giving up looking for work because unemployment benefits have run out and they no longer have the incentive to keep up their search.
It's also worth noting that while the American economy has more jobs than ever before, it also has far more citizens outside the labor force than ever before. Since the recovery began, there has been nearly a one-to-one ratio between jobs created and people leaving the labor force. Part of this is due to demographic factors: as the nation ages, it will naturally develop a higher percentage of retired workers. But this trend may also be on account of a less-than-robust job market too.
All in all, Friday's jobs report was a positive one, and an notable achievement in the U.S. economic recovery. As Brookings Institution economist Justin Wolfers put it on Twitter this morning: