The U.S. labor market has been adding jobs for two-and-a-half years, helping bring down the jobless rate from a peak of 10 percent in late 2009 to the current 8.1 percent rate. But recently, job growth has slowed to under 100,000 per month – not enough to keep the jobless rate on a downward path. Heidi Shierholz at the liberal Economic Policy Institute in Washington says this leaves the U.S. economy well short of achieving its full capacity:
We’d need to add around 350,000 jobs a month to get back to the pre-recession unemployment rate in three years.
With just 96,000 jobs created in August, we’re still a long way off from that kind of strength – and a steady flow of job losses from the public sector isn’t helping. State and local governments have been slashing public payrolls to balance their budgets. In August, the public sector lost 7,000 jobs, but that was mere drop in the bucket of public sector job losses that now total 680,000 lost jobs since August 2008. The total impact is even larger, says Shierholz.
Through ripple effects, the loss of public-sector jobs also causes job loss in the private sector, amplifying the drain on the recovery.
The anemic job growth of the last two-and-a-half years has left the labor market with a deficit of 9.8 million jobs, she said.