Private Payroll Employment Growth After Recessions


The Employment Situation report released today by the Bureau of Labor Statistics (BLS) confirmed that the US economy is on the mend, albeit slowly. The headline number, total nonfarm payroll employment, was down (-54,000) but that figure was dominated by the loss of 114,000 temporary Census Bureau workers who have completed their work on the decennial census. The private sector added 67,000 workers. With only 82,000 of the temporary Census Bureau employees remaining, down from a May peak of 564,000, this arguably artificial negative effect in the labor market is winding down.

Policy debates recently tend to focus on stimulating private sector job growth bolstering business and consumer confidence and avoiding the dreaded double dip recession. The following chart compares private sector job growth in the 6 months prior to and the  18 months following the end of the last 8 recessions. In all of these recessions private payroll employment declined as the recession wound down. In all but the last three recessions private payroll employment recovered quickly following the end of the recession.

In the last three recessions private payrolls continued to decline and remained below the level at the “official” end of the recession for months. After the early 1990’s recession it took 18 months to regain the level of private employment at the end of the recession. Private payrolls were still declining 18 months after the recession in 2001. In the most recent recession it has taken 7 months for private payrolls to recover after the “unofficial” end of the recession.

While we are doing better than the prior two recessions at this stage of recovery, our progress pales in comparison to earlier recoveries. It is clear that robust recovery will require robust job growth and we’re not there yet.


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