They don’t call it the Great Recession for nothing.
More than three years after the U.S. emerged from its worst slump since the 1930s, more than 40% of all the jobs lost have not come back.
That comes to about 3.5 million jobs out of the 8.3 million the recession killed. Meanwhile, the economy needs to produce at least 125,000 new jobs each and every month just to keep up with new entrants to the work force.
And with U.S. gross domestic product running below 2%, the economy is no where near creating enough jobs for new workers, much less those who find themselves still out of work all these years later.
That’s why the unemployment rate remains stubbornly stuck above 8% and why the number of long-term unemployed is at an all-time high.
The recession that ended in June 2009 was far worse than any other downturn in the post-World War II period. For raw job losses, it was five times more destructive than the dot-com-bust recession of a decade ago, in which 1.6 million people lost their jobs.
To get a sense of how serious our current jobless recovery has been, have a look at this chart from Calculated Risk, one of the best financial blogs on the Web.
The chart shows the percent of job losses relative to pre-recession peaks for every downturn since WWII. The losses are aligned at the points of maximum recession. The bottom scale shows the number of months it took for jobs to recover to their pre-recession peaks after bottoming out.
The bright yellow line at the very top of the chart shows that the recession of 1980 was relatively shallow and brief. At its nadir, the economy lost 1.2% of all jobs that existed prior to the recession. More important: It took less than seven months to get them all back.
Now have a look at the bright red line at the bottom of the chart. That’s us, now. At its worst, the economy shed almost 6.5% of all pre-recession jobs. And after more than three years, we’ve still got less than 60% of them back.
Only the recession of 1948, represented by the dark blue line, comes close to such job destruction. But job creation also bounced back relatively rapidly after that recession, as the V-shaped curve shows.
Another interesting takeaway from this chart: Only the last three downturns have been bad at restoring jobs quickly. Every recession since WWII — except 1990, 2001 and 2007 — has seen jobs recover in less than a year.
Of course, it could be much worse. This was a Great Recession — not a Great Depression, as this other chart from Calculated Risk demonstrates:
Percent job losses relative to their pre-Depression peak easily topped 20% back in the 1930s. It took more than a decade — and the mobilization of WWII — to put all those people back to work.
Also (and not shown on this chart), is that the unemployment rate jumped as high as 25% during the Great Depression, or about two-and-a-half times worse than the peak rate of the Great Recession.
Of course, that the Great Recession wasn’t nearly as bad as the Great Depression is of little solace to anyone still struggling to find a job. It truly is the worst downturn and slowest recovery in generations. We can only hope future generations never have to suffer through anything like it.