Between the start of 2011 and the end of 2013, "4.3 million workers were displaced from jobs they had held for at least 3 years," according to a report from the Bureau of Labor Statistics (BLS). As of January, the BLS adds, only 61 percent of those workers were reemployed.
Such numbers highlight the persistently weak state of America’s labor market. Don’t be fooled by the drop in official unemployment; given (a) the post-2007 decline in labor-force participation and (b) the increased number of workers doing part-time jobs for economic reasons, the headline unemployment rate has become a rather misleading indicator.
So what would “full employment” look like? That depends on our estimates of America’s potential growth rate, including our estimates of the country’s potential labor supply.
The Congressional Budget Office (CBO) has done its own calculations, and they confirm that our economy is still missing several million workers. As CBO analyst Bob Arnold writes:
“In the second quarter of this year, if the unemployment rate had returned to its prerecession level and if the labor force participation rate equaled its potential rate, about 3¾ million more people would have been employed, according to CBO’s estimates. The elevated unemployment rate and the depressed labor force participation rate account for that shortfall in roughly equal proportions.”
Just to clarify: “Those estimates of the shortfall in employment do not reflect the number of people who have left the labor force permanently in response to the recession and slow recovery. However, the estimates do include unemployed workers who would have difficulty finding jobs even if overall demand for workers was higher.”
Arnold also makes an important point about the composition of the unemployed: “Although the rate of short-term unemployment (the number of people unemployed for 26 weeks or less as a percentage of the labor force) in the second quarter of 2014 was close to its average rate between 2001 and 2007, the rate of long-term unemployment was still about a percentage point above its average rate during that earlier period.”
As of August, the average duration of unemployment stood at 31.7 weeks. While that is significantly lower than the post-recession peak of 40.7 weeks in December 2011, it is also higher than the average duration was at any point between January 1948 (the earliest month for which the BLS has data) and March 2010. Similarly, the median duration of unemployment was higher in August (13.2 weeks) than it was at any point between January 1948 and April 2009.