New jobs do not erase all worries

Jan. 9, 2012 at 12:20 PM
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CHICAGO, Jan. 9 (UPI) -- U.S. economists are saying that as the job market shows signs of recovery, there are issues beyond the jobless rate that will take years to resolve.

The first concern is the pace of the recovery itself. It has been more than two years since the so-called Great Recession ended in June 2009. It was not until August 2011 that the high unemployment rate began to recede and the rate of improvement is still sluggish.

It takes 125,000 new jobs per month just to keep up with the growing population. That means the gain of 200,000 jobs in December was, essentially, a drop in the bucket when the actual gain was 75,000 jobs and the economy lost 8.4 million jobs during the recession itself.

But economist gathered in Chicago for the annual American Economic Association convention are concerned that those out of work long-term are less likely to find a job than those who are idled briefly, The Wall Street Journal reported Monday.

"We know that once you get into that type of situation it's very hard to get out," Steven Davis, a professor at the University of Chicago's Booth School of Business, told the Journal.

Economists also calculate that for every month a worker is unemployed, their earnings, when they ultimately find work, drops 1 percent.

For some, there are also serious problems with relationships and self-esteem.

"There are people who are going to bear scars for the rest of their careers," said Henry Farber, an economist at Princeton University.

"A huge issue is going to be the quality of jobs and whether we'll have a type that generates a shared prosperity," said Harvard economist Lawrence Katz.

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