The headline of the NYT article on the February jobs report told readers about the “big jump” in private sector jobs reported for the month. While the 222,000 increase in private sector jobs was indeed good compared to the anemic growth that we have been seeing, it is a big misleading to describe this as “big.” In the four years from January 1996 to January 2000 the economy generated an average of almost 240,000 jobs a month.
In past recoveries from serious downturns the economy generated jobs at a far more rapid rate. In the year following the end of the 1981-82 recession the economy created private sector jobs at the rate of more than 280,000 a month, in an labour market that was almost 40 per cent smaller than the current market. In the year from November 1976 to November 1977 the economy created more than 290,000 private sector jobs per month in a labour market that was just a bit more than half as large as today’s.
It is also important to remember, as noted in the article, that the February number was in part a bounceback from a weather weakened January number. Firms that put off hiring because of weather conditions in January ended up doing their hiring in February. The average growth in private sector jobs for the last two months was just 145,000.
Given the ongoing decline in public sector employment due to state budget crunches (@15,000-20,000 per month), this is only a bit more rapid than the 90,000 growth rate needed to keep pace with the growth of the labour force. At this rate, the economy will not return to normal levels of unemployment until well into the next decade.
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