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2018
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Frank Bernheisel: The View From Here
Frank Bernheisel
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Frank Bernheisel
Posted 08.8.17
Just Outside Washington

FRANK BERNHEISEL

What is wrong with this US "recovery"?

The employment figures for July have arrived and the numbers exceeded expectations. Some 209,000 new jobs were created and the unemployment rate fell to 4.3 percent. That brings the total to more than 1 million new jobs since President Trump took office, who proudly tweeted: Excellent Jobs Numbers just released -- and I have only just begun.

The real question is: have we recovered from the Great Recession? The Hamilton Project has calculated the number of jobs needed to return to the national employment rate prior to the Great Recession. To do this correctly, they needed to account for population growth and aging. The measure that the Hamilton Project developed is the "Jobs Gap". This accounts for the 125,000 people who enter the labor force in a typical month during the 10 year period. The Hamilton Project graphed their "Jobs Gap" measure, see chart below. This shows three years of the jobs gap getting greater and then a steady improvement of seven years; practically linear, wow. And the federal stimulus to achieve this only cost us approximately $900 billion.

chart

Closing of the jobs gap does not mean that the labor market has fully recovered from the Great Recession. There are still some problems: (1) a tight labor market -- a low unemployment rate and relatively abundant job openings, (2) depressed employment rate for 25- to 54-year-olds, (3) too many people working part-time for economic reasons, and (4) poor wage growth.

While this recovery is impressive, it is very uneven. The recovery varies by gender, race, education, and by state. As the following chart shows, the state with the lowest jobs gap level -- poorest recovery -- is Wyoming at -4.3 and the highest jobs gap -- best recovery -- at +2.1 is Michigan.

chart

So, on average, we as a nation, are economically back to where we were 10 years ago. However, depending on where you live, your education, your gender, or your race, you could still be in the Great Recession.

Given that the Big Money people that caused the Great Recession are all better off -- the financial sector stock value (XLF) has risen 111 percent in the last five years -- I understand the anger in the purple states on the map.

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