Let's look at a variation on employment, which I call the number of "happily employed." It's simply the civilian employment number less the number of those on involuntary short hours.
Not surprisingly (at least with the advantage of hindsight) the number of Americans on involuntary short hours rose sharply after December 2006. They're not counted as unemployed, but they're surely unhappy about their employment status. The change is not small: we seen a drop of 10.6 million in those happily employed, from 141.8 million in December 2006 to 131.2 million in May 2011.
Worse, the trend rate of growth of employment in the US is 1.1% per annum (a bit below the rate of job growth during the bubble), reflecting steady population growth. It turns out that happy employment grows at the same rate. So by now we should be at 150.2 million ... that is, we're 19 million jobs below trend. If job growth picks up to a steady 3.7% from June on -- a number that would be totally unprecedented for our economy -- we won't be back to trend until 2017. We'll be lucky if we only have a lost decade.
OK, we should add those on active military duty to employment -- it's been a long time since that was involuntary -- but I've put in enough time on this for today. Of course lots of others are in jobs well below their aspirations, or even where they were before the recession, but I know of no way to adjust for that. The baby boomers are starting to retire, so it's also possible that 1.1% overstates the growth of the potential labor force. Finally, I've not fiddled with the starting point of the projection; using December 2006 may overstate things a bit. As with any such calculation, what we'd like to measure is not what we can (or at least regularly do) measure. But the number of active duty has to my knowledge not risen a lot the past several years, the baby boomers are only starting to retire while new school graduates are up a bit, and using December 2006 isn't far off the mark. So to the extent there is a bias in this exercise, it is surely to understate the human cost of the recession.
