Back to Full Employment

cepr.net — By the conventional “peak to trough” measure, the recession that began in December 2007 ended 18 months later, in June 2009. But you’d be hard-pressed to find much evidence of “recovery” in the labor market. Job creation is barely keeping up with population growth. The marginal decline in the unemployment rate (from about 10 percent at its worst to just under 8 percent at the end of 2012) has been driven mostly by people dropping out of the labor force. And long-term unemployment remains stubbornly high. All of this begs a bigger question: What would real recovery look like? The first and simplest measure is simply to chart our progress towards regaining the jobs lost during the downturn. This yields a flat threshold at the December 2007 employment levels, and a jobs deficit that pushed past 8 million in late 2009 and now sits at about 3 million.

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