The February employment situation report from the Bureau of Labor Statistics showed a labor market steadily moving in the right direction, with the addition of 227,000 jobs and the unemployment rate holding steady at 8.3 percent. Furthermore, this release marks two full years of job growth (excluding changes in employment due to temporary workers hired to conduct the 2010 Census). Over the last two years the labor market has gained back nearly 3.5 million jobs, after losing more than 8.7 million in the downturn.

However, the jobs deficit remains very large, especially when you take into account not just the 5.3 million fewer jobs we have now than we did before the recession started but also the fact that we should have added around 4.7 million jobs over this period just to keep up with normal growth in the working-age population. Even at the quite strong average growth rate of the last three months (245,000 jobs added per month,) it will take around five years to get back to full employment in the labor market.

How does this recovery stack up?

Because this release marks two full years of job growth, this is a useful moment to examine how the current recovery stacks up against other recent recoveries. The figure below does just that—it directly compares job growth in the current recovery (which officially started in June 2009) with job growth in the last two recoveries (which began in March 1991 and November 2001). Looking to the left of the dotted line, one sees that jobs fell much further and faster during the Great Recession than in the prior two recessions. But looking to the right of the dotted line, it becomes clear that job growth is actually not that much weaker in the current recovery: It just slightly lags behind the job growth following the recession of 1990 and is actually faster than the recovery following the recession of 2001 (and note, today’s job growth picture is even stronger when considering only private-sector job growth—see the “Indexed job loss” figure in recent EPI analysis—due to unprecedented public-sector losses in this recovery). This figure underscores that the key difference between this recovery and the last two is the length and severity of the recession that preceded them.

Hours flat and wages up modestly

The length of the average workweek was unchanged in February at 34.5 hours, almost recovering its December 2007 level of 34.6 after dropping to 33.8 in the recession. This is a positive sign for future job growth because it means that we have nearly worked off the “hours overhang,” and employers needing to add additional hours will be more likely to add new workers instead of increasing the hours of the workers they have. For more on this, see this recent EPI Snapshot. Average hourly wages increased by 3 cents in February, a 1.4 percent annualized rate over the last three months. This remains far below the pre-recession growth rate (3.3 percent from December 2006 to December 2007), as persistent high unemployment has exerted strong downward pressure on wage growth. Average weekly wages grew more strongly at $1.04, and a 2.6 percent annualized rate over the last three months.

Still an extremely difficult environment for job seekers

The share of unemployed workers who have been unemployed for more than six months decreased from 42.9 percent to 42.6 percent over the last month. However, it is still not far off its peak of 45.5 percent in March of last year, and remains more than 25 percentage points above its December 2007 value of 17.4 percent. Despite recent job growth, the fact that we still have large numbers of long-term unemployed is unsurprising given that the ratio of unemployed workers to job openings has been 3-to-1 or greater since September 2008, almost three and a half years ago. It remains an extremely difficult environment for job seekers.

Though the unemployment rate held steady, underemployment dropped

The “underemployment rate” (officially, the U-6 measure of labor underutilization) is the Bureau of Labor Statistics’ most comprehensive measure of labor market slack. It includes not just the officially unemployed and the marginally attached (jobless workers who want a job and are available to work but have given up actively seeking work), but also people who want full-time jobs but have had to settle for part-time work. This measure decreased from 15.1 percent to 14.9 percent over the last month, due to an 111,000 decline in “involuntary” part-time workers, and a 212,000 decline in the number of marginally attached workers. In February there were 23.5 million workers who were either unemployed or underemployed (12.8 million officially unemployed, 8.1 million involuntary part-time workers, and 2.5 million marginally attached). Racial and ethnic minorities have been particularly hard-hit by underemployment.

Industry breakdowns

As has been the case for more than three years, public-sector employment dropped. In February, federal government employment dropped by 7,000 and state government employment dropped by 1,000. Local government employment, however, increased by 2,000, the first increase since last August. Since the recovery officially began in June 2009, close to half a million local government jobs have been lost, which has been an enormous drain on the recovery, so improvements in this sector are welcome.

Employment in restaurants and bars increased by 41,000 in February, though some of that growth could be due to unseasonably warm weather. Health care added 49,000 jobs, well above its average monthly growth rate of 24,000 in the prior three months, while temporary help services increased by 45,000. This EPI blog post discusses why the increase in temp jobs is not a cause for concern at this point. Manufacturing also had a strong showing, adding 31,000, all in durable goods. The auto industry contributed 6,000 of those jobs.

Retail lost 7,000 jobs in February, but this appears to be a data issue with department stores, which gained 26,000 in January and lost 25,000 in February. Over the last two months, retail has added 9,000 on average. Construction lost 13,000 jobs in February.

Demographic breakdowns

Unemployment in February 2012 was 8.3 percent for those age 25 and older with only a high school education, and 4.2 percent for those age 25 and older with a college degree or more. While workers with higher levels of education have lower unemployment rates, workers at all levels of education have seen their unemployment rates roughly double since 2007, running counter to the notion that unemployment is high because employers are unable to fill their demand for workers with higher education credentials.

Considering additional breakdowns by age and race/ethnicity, we find that all major groups of workers have experienced substantial increases in unemployment over the Great Recession and its aftermath. However, young workers and racial and ethnic minorities have been and continue to be hit particularly hard.

• In February, unemployment was 16.5 percent among workers age 16–24, 7.3 percent among workers age 25–54, and 5.9 percent among workers age 55 and older (up 4.8, 3.3, and 2.7 percentage points, respectively, since the start of the recession in December 2007).
• Among workers younger than age 25 who are not enrolled in school, unemployment over the last year averaged 21.1 percent for those with a high school degree, and 8.8 percent for those with a college degree (reflecting increases of 9.1 and 3.4 percentage points, respectively, since the annual average of 2007). (Twelve-month averages are used here since seasonally adjusted data are not available for these series.)
• Unemployment in February was 14.1 percent for African American workers, 10.7 percent for Hispanic workers, and 7.3 percent for white workers (up 5.1, 4.4, and 2.9 percentage points, respectively, since the start of the recession).
• Men saw a much larger increase in unemployment than women did during the recession, but have seen stronger improvements in the recovery. The unemployment rate reached its pre-recession low in late 2006 and early 2007, at 4.4 percent for men and 4.3 percent for women. Male unemployment peaked at 11.2 percent in October of 2009, and has since fallen to 8.3 percent. Female unemployment continued to rise for another year, when it peaked at 9.0 percent in November 2010, and has since fallen to 8.2 percent.

Labor force participation and the employment-to-population ratio

The labor force participation rate increased to 63.9 percent in February, just slightly higher than its low point of the downturn, which was 63.7 percent in January. Remarkably, the labor force has grown by less than a million workers since the recession started in December 2007, though the working-age population has grown by nearly 10 million in that time. There are currently 2.5 million “marginally attached” workers—workers who want a job, are available to work, but have given up actively seeking work. If these workers were in the labor force and counted as unemployed, the unemployment rate would be 9.7 percent right now instead of 8.3 percent.

At a time like this, with the labor force not growing at a steady pace, arguably the cleanest measure for assessing labor market trends is the employment-to-population ratio, which is simply the share of working-age people who have a job. The ratio was 58.6 percent in February, a slight increase from its January value of 58.5 percent, but not far from its low of 58.2 percent last summer. The labor market still has substantial ground to make up: The employment-to-population ratio was 63.3 percent five years ago, in February 2007, before the recession started.

Conclusion

The labor market still has a jobs deficit of 10 million jobs. The figure above underscores the fact that what is underlying that deficit is the length and severity of the recession that preceded this recovery. Of course, this in no way lets today’s policymakers off the hook. The key problem in the current economy is depressed demand for goods and services, which (since workers provide goods and services) translates into depressed demand for workers. Despite steady improvements in recent months, the nation’s labor market remains weak, and we continue to need aggressive policies to create jobs.

— Research assistance provided by Nick Finio, Natalie Sabadish, and Hilary Wething