When will the U.S. economy return to full employment? No sooner than 2018, according to a new report from McKinsey — oh, and that’s the best-case scenario. Worst case, the economy produces a measly 9-10 million jobs over the rest of the decade, far short of the 21 million jobs the consulting firm estimates we need to bring unemployment down to around 5 per cent by 2020.
Here’s how that more pessimistic prognosis would show up in the U.S. labour market, McKinsey says:
It would mean further contraction in manufacturing employment, a continued wave of automation and offshoring in administrative and back-office positions and a new wave of automation in retail (for instance, more widespread adoption of self-checkout).
In short, if the economy doesn’t snap back into place, it would look a lot in nine years like it does now, only more so. Over the next five years, companies think the biggest change in their workforce will be an accelerating shift toward part-time, temporary or contract workers. (In which case, arrivederci, middle class America — it was nice while it lasted.) Other expected changes include more telecommuting, additional offshoring and outsourcing, and a greater reliance on older employees.
The problem goes deeper than the recession, according to McKinsey. Although employment losses following the financial crisis were twice as severe as in previous major postwar downturns, job creation was flagging even before the housing crash.
Between 2000 and 2007, the U.S. economy produced only 9.2 million jobs, less than half the rate of increase in previous decades. Worse, more than 1 million of those positions were in financial services, construction and other sectors that overexpanded during the bubble years.
Simply waiting for the recession to recede and a more normal business cycle to resume won’t bring jobs back to previous levels, McKinsey says. Rather, creating new jobs must become a “national priority.” The question is whether the U.S. can resurrect the buoyant labour market that characterised previous eras of strong growth or whether this latest jobless recovery represents the “new normal.”
The firm — a longtime cheerleader for unfettered globalization and a motor for the very economic forces it describes as raking the U.S. economy, it’s worth noting — offers another word of warning:
Despite the recent financial crisis, the global economy is booming, and for the most part American companies have adapted and thrived. However, the same cannot be said for American workers. The United States needs to ensure that its workers — not just its companies — win “share” in the global marketplace.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.