Thanks to Fed Chairman Ben Bernanke, we know the recession is over from a "technical perspective," but a new study from two Rutgers University economists indicates the recovery will be even slower and more painful than many had expected.
In the 20 months since the recession began in December 2007, the United States has lost 7 million private sector jobs. Add to that the projected growth in the labor force of an estimated 920,000 private sector jobs per year and the employment deficit could grow to 9.4 million jobs by the end of this year.
To eliminate that deficit, the United States will have to add 2.15 million private-sector jobs per year starting next January and maintain that pace until August 2017, say Dean James Hughes of the Edward J. Bloustein School of Planning and Public Policy and University Professor Joseph Seneca in "America's New Post-Recession Employment Arithmetic," published in the Advance & Rutgers Report.
Calling the past 10 years "The Lost Employment Decade," Hughes and Seneca note that the nation gained 35.5 million jobs in the 1980s and 1990s, but will end this decade with 1.3 million fewer private-sector jobs than in December 1999.
"This is the first time since the Great Depression of the 1930s that America will have an absolute loss of jobs over the course of a decade," they note.
In past recessions, the service sector has largely escaped major job losses. Not this time around. While construction and manufacturing have accounted for about half the jobs lost in this recession, Hughes and Seneca report, the dominant service sector has accounted for 50.7% of the lost jobs. As a result, they warn, "the once recession-resistant services sector may now be much more vulnerable to job losses and global competition and thus may be a less vibrant source of employment growth going forward."
During this prolonged recovery, states will compete intensely for new jobs, predict Hughes and Seneca. States that provide cost-conscious employers with the best economic climate are the likely winners when location decisions for new or expanded operations are made.