The labor market is going deeper into the red as employment growth once again falls far short of any reasonable standards for solid job creation. In May 2005, the U.S. labor market created a meager 78,000 new jobs, according to data released by the Bureau of Labor Statistics today. This is an increase of 0.06 percent over April’s employment, far below the historic average monthly growth of 0.17 percent. Only in six months from March 2001 to May 2005 has employment growth been higher than the historical average.
In the remaining 44 months of this business cycle, including May 2005, it has fallen far short of historical job creation trends. As a result, job creation in this business cycle has been a fraction of the historical average. It totaled a monthly average (on an annual basis) of 0.2 percent compared to the historical average of 2.1 percent (table 1). In fact, employment growth in the private sector has been so weak for the past fifty months that May 2005 was the first month that private sector employment was larger than at the start of the business cycle more than four years ago.
With weak employment growth following a period of job loss, the labor market now has a massive jobs deficit. For instance, if employment had grown at the average rate during the first 50 months after a recession began, there would be 9.5 million more total jobs and 8.4 million more private sector jobs than there were in May 2005 (table 1). Just to keep pace with population growth since the recession started in March 2001, the economy would have needed an additional 6.2 million jobs by May 2005. At this point, the labor market has fallen so far behind that it will take years – if not decades – to catch up to any reasonable standard of job creation. The result is that millions of Americans cannot get the jobs that they desperately need.
Christian E. Weller is a senior economist at the Center for American Progress.