Economists, criticized for wearing rosy glasses before the recession, sported much darker shades when talking about the recovery Friday during the annual meeting of the American Economic Association in Denver.
Getting the U.S. population employed at pre-recession levels will require adding 20.8 million jobs over the next six years, forecast Northwestern University economist Robert Gordon.
That translates into 288,000 jobs a month on average, a sharp contrast to the 103,000 jobs a month created over the past year during the recovery, he said.
Assuming retirement portfolios recover enough to allow a mass exodus of baby boomers from the workforce during that period, 222,000 jobs a month are needed.
Although large and middle-sized firms have resumed hiring, small businesses haven’t, said Princeton University economist Alan Krueger, who served as chief economist at the U.S. Treasury Department in 2009 and 2010. “The small establishments have been struggling,” said Krueger, citing tight credit as one reason.
State and local governments, which avoided job reductions during the recession, are now starting to shed workers, adding another headwind, he said.
MIT economist David Autor suggested that the housing bubble masked the underlying labor-market problems the country faced and kept unemployment rates artificially low.
The downturn has accelerated a trend of losses in middle-tier jobs and the concentration of job growth in high- and low-skilled positions, Autor said.
Making matters worse, U.S. males are falling seriously behind in obtaining the education needed to fill those more skilled jobs.
“We are not on a trajectory to educate our way out of the labor-market woes we face,” Autor warned.
Economists continue to wrestle with why job losses were much more severe than their models predicted, even though declines in U.S. GDP were less severe than expected for a credit crisis.
Job losses were a third — about 1.6 million positions — greater than what the decline in GDP would have suggested, Krueger said.
Although consumer spending has rebounded, spending on services, a key driver of hiring, has lagged, Krueger said, offering a partial explanation.
Business confidence and what led employers to shed more jobs than expected are other areas that need more study, he said.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
