Americans workers are getting a sobering glimpse of the post-Great Recession world.
Yes, jobs are more plentiful. But unemployment is likely to hover near 10 per cent longer than anyone imagined.
The U.S. economy generated an impressive 290,000 jobs in April, marking the largest gain in four years and a fourth-straight monthly gain, according to the U.S. Labour department’s monthly employment report released Friday.
The jobless rate, however, rose to 9.9 per cent from 9.7 per cent as legions of underemployed workers returned to the labour pool, based on the department’s separate household survey.
“The bottom line is that the U.S. labour market still has a monumental job ahead,” said economist Meny Grauman of CIBC World Markets.
The jobless rate could stay near 10 per cent well into next year, he predicted.
Think of it this way: At the current rate of job creation, it would still take more than two years to replenish the 8 million-plus U.S. jobs lost during the recession. And even then, the jobless rate would barely budge as waves of discouraged workers, people forced into part-time jobs and those unwillingly self-employed slowly drift back into the labour pool.
“The era of job destruction is firmly in the rear-view mirror,” Eric Lascelles, chief strategist at TD Securities in Toronto, remarked in a research note.
“However, let us not forget that the U.S. lost a devastating 8 million jobs over the credit crisis, and the sustained job creation of the past four months has only nibbled off about one-sixteenth of that total.”
In April, for example, 805,000 Americans rejoined the labour pool in search of work. Only 550,000 of them managed to get a job. The result was a 0.2-percentage-point rise in the jobless rate.
Peter Morici, an economist and business professor at University of Maryland, argued that the real rate of unemployment would probably be closer to 20 per cent if everyone who wanted a job was actively looking.
