How long will it take to reduce the unemployment rate?

December 20, 2012 at 9:56 am 3 comments

Today the Washington Post summarizes some calculations made by the Brookings Institution showing how long it would take to get the nation’s unemployment rate down to 6.5 percent (a rate that the Fed considers a “normal” level). According to the Federal Reserve, it will take another 2.5 years– but that’s if job creation continues steadily at 220,000 jobs per month. Economists at the Brookings Institution took a look at how long it would take to reach the 6.5 percent rate with different assumptions about the rate of job growth. Here is what they found:

  • rate of 150,000 jobs/month – Spring 2018
  • rate of 200,000 jobs/month – Fall 2015
  • rate of 250,000 jobs/month – End of 2014
  • rate of 300,000 jobs/month – Spring 2014

The last time the unemployment rate was at 6.5 percent was in 2008.  These calculations cannot account for all the factors that influence job creation or labor force participation rates, so it may take even longer than these calculations indicate. In addition, the story will be very different among the states, as many still have much higher unemployment rates than the national average. North Carolina’s unemployment rate is above 9 percent.

In October, the Budget and Tax Center reported that the jobs deficit in North Carolina– the number of jobs needed to replace the jobs lost in the recession and to keep up with population growth– increased. In the beginning of the year, the jobs deficit was 530,600. By October it was up to 550,600.

This shows just how important job creation is for our state and the nation in reducing unemployment and in achieving a true economic recovery. As the Washington Post states, these numbers indicate that “Job creation is America’s first, second, third, and fourth most important problem.”

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Entry filed under: Economic Development, Economy, Jobs & Employment. Tags: , , , .

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