US job market recovers from Great Recession

U.S. job market has finally returned to levels it was at before the financial bubble burst. Photo / AP

A decade after being devastated by the Great Recession, the U.S. job market has finally returned to levels it was at before the financial bubble burst and the economy cratered.

The economy added 209,000 jobs in July, government data showed Friday. After adjusting for changes in the population, that brings the level of employment in the United States back to that of November 2007, the month before the recession officially began, according to a report published Friday morning by the Brookings Institution's Hamilton Project.

It is an important milestone for the job market. But over the past decade, the recovery has not only lifted the economy but also transformed it. That has resulted in dramatic changes in where and how Americans work, creating substantial benefits for some and harsh consequences for others.

Implacable economic forces such as automation and globalization have eliminated good-paying factory jobs in the United States. Instead, more American workers have moved into the service sector, including female-dominated industries such as health care, which expanded as the U.S. population aged.

Workers with more education have been able to take advantage of these trends, capturing high-paying jobs in technology, finance and medicine. But less-educated workers have lost lucrative opportunities in manufacturing goods - leading to more economic inequality and growing political polarization.

Yet the Brookings report suggests that other economic gaps - such as those between men and women, and between whites and minorities - have narrowed by an important metric.

Although men and white people still have much higher levels of employment and earnings than women and minorities, the new research shows that men and whites have yet to recover the same level of employment they had before the recession, unlike women and African-Americans. Less-educated workers also lag far behind their pre-recession level of employment.

These changes are largely because of the decline of male-dominated jobs such as manufacturing and construction, as well as broader economic trends such as automation, which has displaced less-skilled workers and decimated well-paying factory jobs.

Promising to help rescue workers from the harm they sustained from these trends was a central feature of President Donald Trump's campaign. Yet the Brookings data also demonstrates the challenge in accomplishing that goal, since these workers have yet to regain their pre-recession prominence.

Even so, the president has seized on strong job gains in recent months as evidence of his administration's success. "Excellent Jobs Numbers just released - and I have only just begun," he tweeted Friday morning.

Michael Feroli, chief U.S. economist at JPMorgan Chase, said that gains in the job market were most likely because of strong momentum that predated the presidency. Average monthly jobs gains this year, at 184,000, are basically in line with the average monthly gains of 187,000 in 2016.

"We're looking at job growth that was pretty similar to what we were getting a year ago or two years ago," Feroli said. "I just don't think at a business cycle frequency these things respond to political developments."

The economy has been growing at a slow but steady pace, with the current economic expansion already the third-longest such period in history.

The jobs data for July brought more good news. The unemployment rate ticked down to 4.3 per cent, compared with 4.4 per cent in June. The labor force participation rate - the percentage of the population that is either employed or actively seeking work - ticked up to 62.9 per cent after dipping in previous months.

Only wage growth was still tepid, rising by 2.5 per cent from the year before - a sign that the economy may have further to go before reaching the point where more expansion merely results in inflationary pressures. As the unemployment rate falls, business owners have to compete more to hire qualified workers, forcing them to raise wages and adding to inflation. But that trend has yet to appear in force.

The Brookings report indicates that the economy is in solid shape despite some persistent areas of weakness.

"It does not mean there's no slack in the economy, that we're at full employment," said Diane Whitmore Schanzenbach, one of the report's authors. "But it does mean the job losses from the Great Recession are behind us."