It's jobs, stupid. As we celebrate the execution of America's No. 1 enemy, we are jerked back to the horrible reality of America's greatest domestic challenge. Unemployment claims in the last week of April surged to their highest level since last summer. The recovery is in peril—and so is the fabric of American society.
The best social program, the best economic program, and the best family program in America has long been a job. Not anymore. The jobs are not there.
Even before the 2008 financial collapse, job creation was waning. From the brief 2001 recession it lagged more than in any expansion since World War II. When the Great Recession came along, it wiped out the equivalent of every job created in the whole previous decade. For the 80 percent of Americans born after World War II, this is their Depression, and it began long before the housing bubble burst and Wall Street melted down. [See a slide show of the 10 best cities to find a job.]
Forecasters had predicted the economy would create 22 million jobs in the first decade of the 21st century. Some hope. Even at the decade's economic peak, only 7 million jobs were created, the lowest of any decade recorded by the federal government stretching back to the 1940s.
The decades tell a story that begins with a bang and ends with a whimper:
Our total payrolls today of 131 million are lower than they were in March 2000. Yet, over this 11-year period of flat employment, the population has risen by nearly 30 million. Twenty-two months after most recessions, the average recovery of nonfarm payrolls is 200 percent of jobs lost from the recession, compared to only 20 percent of jobs losses recouped this time. Payrolls remain 7 million shy today of where they were when the recession began, despite the most stimulative fiscal and monetary policy in our history. [Check out a roundup of political cartoons on the economy.]
Accompanying the lack of job growth in the past decade, middle-class incomes adjusted for inflation fell from a median of $58,500 in 2000 to $56,500 in 2007—another first. As chief economist David Rosenberg of investment firm Gluskin Sheff notes, with more than six people in the aggregate labor pool vying for every job opening, wage growth is decelerating. Labor costs have declined on a four-quarter trailing basis each and every quarter since the beginning of 2009.
The greatest impact has been on manufacturing, where over 5 million jobs vanished in the first decade. Goods-producing employment, which peaked at 24.6 million in the year 2000, dropped by one fourth to around 18.5 million. On top of that, of the 7.5 million-plus jobs lost during the Great Recession, almost half came from the goods-producing industries. It is referred to as a man-cession because men lost many more jobs than women, who benefited from job growth in healthcare and government rather than the private sector.
Another factor is the slow pace of lost job recovery. The 2001 recession wiped out 2.7 million payroll jobs and it took four years for us to recover the lost jobs. We lost 8.4 million jobs in the Great Recession and only a million and a half have returned, and half the new jobs are in temporary help agencies as firms resist hiring full-time workers. Quite simply, America's great job-creation machine is sputtering badly. Who knows when all the jobs lost will return. The most recent monthly unemployment claims of 474,000 shocked the financial markets and underline the recovery's fragility.
Why is this recovery so different? In past recessions, when growth picked up, many employers recalled the workers they had laid off. Not this time. Companies facing less than stellar revenue growth have focused on cost-cutting, so rehiring hasn't happened much. A key to job growth is new business formation, but start-ups are highly dependent on credit card borrowing, home equity, and local bank loans, and these sources have virtually evaporated.