Keith Hall is a senior research fellow at the Mercatus Center at George Mason University, and former commissioner of the Bureau of Labor Statistics.
The weakest economic recovery on record seems to be slowing down. Job creation, tepid at best over the past three years, has now fallen back to just 87,000 per month since March. Just 58.3 percent of us have work of any sort, a range we hadn't seen before this recession since the early 1980s, when less than half of women in the United States held a job. The Federal Reserve has been clearly signaling their impatience with the slow recovery and more Fed action may be forthcoming.
We should feel more than just impatience towards this recovery; we should be worried. There are serious, permanent consequences to this. Household balance sheets remain a mess. Real household wealth has not recovered and remains down by $11 trillion. After growing by 13 percent over the prior three years, real wealth fell by 14 percent between 2007 and 2010, with every income range but the lowest losing ground. In 2010, just 52 percent of families were able to save with precautionary reasons being the most cited motivation. This has crowded out saving for more traditional family goals like homeownership and education, which accounted for just 11.4 percent of savings in 2010. The federal government's balance sheet is an even worse mess and has now reached a negative $11 trillion, or an entire year of national take home pay. Much of this damage will never be fixed.
Unlike past recessions, this one has severely impacted even long-tenured workers. Since 2007, 13 million of those with the same employer for at least three years have lost their jobs. Of those that lost work since 2009, just 56 percent have become re-employed. Research estimates have found that even these stable, long-tenured workers will suffer permanent earnings loss with unemployment. On average, they will lose nearly 3 years' worth of earnings, most of which will come after they find new work because of what may be permanently lower pay.
In addition to earnings losses, job displacement has been shown to have an impact on other welfare related outcomes such as future job stability, earnings volatility, health, and mortality. There is even evidence that the impact goes on to the next generation as there are declines in both school and future labor market performances of children from families that experience job loss.
So, are you as well off as you were before the recession? For many families, the answer may forever be "no."