Rutgers Job Study: Full Employment By 2017!

Rutgers University has released a sobering study on expected recovery rates in employment levels for the United States economy. The study, America's New Post-Recession Employment Arithmetic indicates that the employment deficit has grown so large that it may take until 2017 for the nation’s labor market to return to its pre-recession level.The study, released by the Edward J. Bloustein School of Planning and Public Policy is a cause for concern. The study reports that the US economy has shed over 7 million jobs since the recession officially began in December 2007. This has reduced the total number of jobs in the United States by 5.8%, the largest drop during any downturn since World War II. The authors of the study, James W. Hughes and Joseph J. Seneca, project that the employment deficit will total 9.4 million private sector jobs by the end of the year.

The study estimates that if the economy adds more than 2 million jobs annually starting next year, it would take until August 2017 – more than seven and a half years – to both recover the jobs lost since December 2007 and create new positions for the roughly 1.3 million people who join the labor force each year.

Hughes and Seneca believe that a recovery in 2017 may be an optimistic assumption. An economic expansion that lasts for seven years is about 50 percent longer than the average for postwar recoveries. Hughes and Seneca refer to the last ten years as “The Lost Employment Decade,” because the U.S. is on track to finish this year with 1.3 million fewer total jobs than it had 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” the report states.

The past decade has witnessed a startling reversal in economic fortunes for the US economy. The U.S. finished the 1990s with 19 million more private sector jobs than it had at the start of the decade. Approximately 16 million jobs were created during the 1980s. Before the recession, annual rate of job growth was about 1 million jobs per year, about half of the growth rates of the previous two decades.

Hughes and Seneca believe that this will force states into fierce competition to realize job growth. States must respond by creating desirable environment for business based on costs, affordability, business climates, support infrastructure, labor force quality and tax policies.

We believe that joblessness and unemployment continue as significant threats to economic growth. The conception of the unemployment rate as a lagging indicator is emerging as a lead driver inhibiting economic recovery. High unemployment continues to inhibit consumer spending and works against a rebound in the housing market and related construction industries. Retailers are already bemoaning the bleak forecast for this years holiday shopping season. State and local governments reeling from dwindling tax receipts are beginning to crack under the strain to fund basic community services, public schools and social assistance programs.

The structural dysfunction of the American economy is a critical issue that must be addressed. A concerted program aimed at the development and incubation of SME manufactures will encourage the entrepreneurial energy and kick start badly needed economic drivers to ignite a recovery. Sum2 advocates the adoption of The Hamilton Plan and the creation of an SME Development Bank to reestablish sustainable growth and national prosperity.

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Risk: unemployment, job creation, SME, political stability, recession