The US Will Only Recover 8 Million Lost Jobs in Five Years

Although the American economy is recovering, it will take at least five years to regain the 8.2 million jobs lost during the recession, more than after any recession since World War II, according to a study by Duke University.

Many Americans face the risk of not finding new jobs for years, even as the economy strengthens again. The unemployment rate in the US was 9.9 percent in April, and the rate of those seeking jobs for six months or longer was 4.3 percent, its highest level since 1948. This is a consequence of increased productivity among companies, which, thanks to automation, competition, and technological efficiency, have found ways to produce the same amount of goods with fewer workers.

According to the Duke University study and CFO Magazine, more than a third of directors from 620 large companies said they do not expect the number of employees in their companies to reach pre-recession levels for at least another three years. Almost all cited increased productivity and weak consumer demand as reasons. Productivity in the US increased by 6.3 percent from March of last year to the same month this year, marking its largest growth in the last 48 years.

Although most economists believe that such growth is not sustainable in the long term, it is very likely that millions of lost jobs will never return, especially in the retail, industrial, and marketing sectors. During the recession, 1.2 million jobs, or 7.5 percent of all jobs in the retail sector, were lost. Starbucks closed 800 cafes in the US, and retail chains such as Circuit City and Linens & Things went bankrupt. It is estimated that about 20 percent of the lost jobs in that sector will never be recovered.

In the industrial sector, 2.1 million workers, or 16 percent of their total number, were laid off during the recession. General Motors eliminated 65,000 jobs, Boeing and Goodyear together reduced their workforce by 15,000, and many other companies laid off thousands of workers. Given that Americans are now buying fewer cars and homes, Moody’s Analytics estimates that more than a million jobs in the automotive, lumber, construction, and other industries will never return.

Marketing and PR agencies lost 65,000 jobs, or 14 percent of the total employed before the recession. Moody’s Analytics estimates that the decline in employment in that industry will continue over the next five years. Aware of the difficult situation, more than half of the 15.3 million unemployed Americans believe that their status will remain permanent. This is the highest level of pessimism since 1967, when such a survey began. In previous recessions, workers considered unemployment temporary. Companies would rehire them as soon as the economy recovered. While some economists believe that companies will not be able to ‘squeeze’ more work from employees for much longer and will start opening jobs again, others believe that this will not happen anytime soon as corporate America is only in the early stages of a new cycle of productivity increase. (H)