The 2000s””the Noughts, some call them””turned out to be jobless. Only about 400,000 more Americans were employed in December 2009 than in December 1999, while the population grew by nearly 30m. This dismal rate of job creation raises the distinct possibility that America’s recovery from the latest recession may also be jobless. The economy almost certainly expanded during the second half of 2009, but 800,000 additional jobs were lost all the same.
It took four solid years for employment to regain its peak after the 2001 recession. With jobs so scarce, wages stagnated even as the cost of living rose, forcing households to borrow to maintain their standard of living. According to Raghuram Rajan, an economist at the University of Chicago, this set the stage for the most recent crisis and recession””a crisis, ultimately, caused by household indebtedness. If the current recovery is indeed jobless, wages will continue to lag. Since they are now virtually unable to borrow, households will have to make do with less, and reduced spending is likely to make the economic recovery more uncertain still.
So which is it to be: jobless or job-full? Of paramount concern is the growth in long-term unemployment. Around four in every ten of the unemployed””some 6m Americans””have been out of work for 27 weeks or more.