The above chart shows what I refer to as the “jobs gap” that has been created since December 2007. The jobs gap includes all nonfarm payroll losses and the lack of new job creation. In order to just keep the U.S. unemployment level constant approximately 125,000 jobs must be created each month. The above chart layers the lack of new job creation on top (or bottom) of the nonfarm payroll losses to give a picture of the true employment problem the U.S. is facing. The U.S. is now faced with a “jobs gap” that totals just over 9 million. In order to return to the pre-recession unemployment rate a total of 9 million jobs would have to be created immediately.
Here’s another way to look at the issue. In order for the U.S. to return to the pre-recession jobs situation in the next two years a total of 12 million jobs will need to be created. 12 million = the current nine million gap + the three million new jobs that would need to be created over the next 24 months to keep pace with new individuals entering the labor force. Given these numbers I believe the U.S. unemployment rate will remain elevated for many years to come (even long after we start to see improvement in the employment situation).
Data source:
U.S. Bureau of Labor Statistics
=================================================================================
A quick update for the December 2009 number for nonfarm payroll numbers that have just been released. The end of the year saw another monthly drop in nonfarm payroll employment, which fell by another 85,000 jobs. These numbers were worse than those that had been projected by the administration.
Comment by Edd Jobs — January 23, 2010 @ 10:06 am