With each new employment report, there is further evidence of the economy and job market’s continued improvement. However, each new report also serves as a reminder of how far the economy still has to go before reaching pre-recession levels. The slow progress has led many to conclude that job creation remains weak, but a closer look at the data reveals that current job creation levels are outpacing that which occurred during the last expansion.
Following new revisions to the employer survey data reported in today’s employment situation report, private-sector payrolls expanded by an average of 184,000 net new jobs per month in 2012. During the two-year period from January 2001 through December 2012 monthly job gains in the private sector averaged 194,000. So, how does this compare to other expansions?
From 2004 through 2006, the peak job creation years following the 2001 recession, private-sector payrolls increased by an average of 168,000 net new jobs per month. So, average payroll gains are trending roughly 30,000 jobs more in the current economy. Overall, the 35 consecutive months of positive job gains in the private sector have produced a total of 6,111,000 new jobs. In the first 35 consecutive months of job gains following the 2001 recession (August 2003 – June 2006), a total of 5,756,000 jobs were added to private sector payrolls.
Going back further to the robust expansion years leading up to the dot.com boom and subsequent collapse (which set off the 2001 recession) employment data show that private sector payrolls were growing at a clip of about 221,000 per month. What made this period of employment expansion so exceptional was not the number of jobs added each month, but the overall endurance of the job creation. The 221,000 average job gains per month were sustained over an eight year period, from January 1993 through December 2000. There was only one month in that period when more jobs were lost than were added (January 1996; 6,000 jobs lost). Overall, private payrolls expanded by 21.2 million jobs.
It is difficult to look at the employment situation each month and conclude that we are making progress on the jobs front. But, the fact is that this economy is indeed adding jobs and doing so at a faster rate than the previous period of expansion. Unfortunately, we simply had a much deeper hole from which to escape. From February 2008 through February 2010, private payrolls experienced 25 consecutive months of contraction, wiping out more than 8.8 million jobs. That is more than the total job losses incurred in the previous three recessions combined. It could be another 18 to 24 months before private sector payrolls reach pre-recession levels. Of course, a lot could happen between now and then that could significantly increase job creation or derail it. However, for the moment, the economy and employment are definitely heading in the right direction.