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If this is a jobs recovery, we have a very low bar

Job Seekers Attend "HIREvent" Job Fair In San FranciscoJob Seekers Attend "HIREvent" Job Fair In San Francisco
Job seekers wait in line to meet with a recruiter. Photo by Justin Sullivan—Getty Images

Like everything, the temperature of the jobs market is relative.

In 2009, economists from Rutgers argued that it could take the economy until mid-2017, nearly 10 years from its December 2007 peak, to get back to full employment. Many people dismissed the estimate as way too pessimistic. But now, five years later, even with the jobs numbers on the rise, a return to full employment (at the time considered around a 5% unemployment rate) by August 2017, as the Rutgers economists predicted, is not looking so bad.

In 2011, the consensus estimate for the average number of monthly jobs the economy would add was 200,000. The actual number for 2011 was 174,000.

Recently, though, there has been a growing sentiment that the job market is kicking butt. On Friday, in a speech at the annual Jackson Hole Federal Reserve convention, Fed Chair Janet Yellen said, not once but three times, that employment was improving much faster than expected. She did have some caveats. But Yellen said if the labor market recovery continues to be “more rapid than anticipated” the Fed might have to think about raising rates pretty soon.

Anticipations, though, are all about when you measure them. For instance, just a few weeks ago, economists were predicting that the economy added 230,000 jobs in July. The actual number was 209,000. And that was well below the nearly 300,000 workers that employers added to their payrolls in June. Yes, the number of people working in the U.S. is now as high as it was before the economy tanked. But factor in all the colleague graduates and immigrants who have entered the work force since 2007, and the economy still has a gap of 5.7 million jobs, the Hamilton Project, a division of Brookings Institutions, estimates.

And that doesn’t count 7.5 million Americans who have taken part-time jobs, but would like full time work. That’s an additional 3 million more workers who were working part-time for so-called economic reasons than before the recession.

Closing those two jobs gaps — the growth in the population and the part-time work gap — would take an increase of roughly 360,000 jobs a month for three years. We’re well short of that.

So yes, things have improved this year. The economy has produced an average of 230,000 jobs a month. And, yes, that’s better than the 198,000 average that economists were predicting at the beginning of the year, according to newsletter Blue Chip Economic Indicators. But the economy produced an average of 194,000 jobs in 2013. The expectation was that the improvement in the jobs market in 2014 would be a meager 4,000 jobs a month.

By that measure we are doing better than anticipated. But go back five years and most people thought by the time 2014 rolled around we would be long recovered, or far closer than we are. After years of economic disappointment, the bar is pretty low. That could end up being one of the long-lasting legacies of the Great Recession, and something that Yellen and the rest of the Fed need to think hard before declaring that their job is done.