Analysis: Job creation happening faster than in other recessions

Job creation is happening at a faster rate than during previous recessions — more good news for the White House and congressional Democrats who have spent the past two years defending their policies as the economy has slowly recovered.

A Joint Economic Committee state-by-state analysis released Wednesday finds that jobs are returning faster compared with previous recessions, despite greater overall job losses across all 50 states.

While the recovery looks different across states, 46 states and the District of Columbia added private-sector jobs from January to November this year, with an increase of 4 percent in the District of Columbia and more than 2 percent in Oklahoma, Texas, Minnesota, Arkansas, North Dakota, Louisiana and Indiana.

“While the private-sector job gains in 2010 are encouraging, they do not change the basic reality that more than 15 million people are still out of work and living through the aftershocks of the Great Recession,” said Rep. Carolyn Maloney (D-N.Y.), chairwoman of the JEC.

The most recent recession was deeper in terms of job losses than any of the four previous recessions — national job losses were 5.3 percent this time around, compared with job losses of 1.2 percent (2001), 1.1 percent (1982-83) and 3.1 percent (1981-82).

The economy shed more than 8 million jobs between 2007 and 2009 and has recovered about 1 million of those this year. Still, the unemployment rate has remained persistently high, hovering near 10 percent for 16 straight months.

While the 1981-82 recession was previously considered the deepest post-World War II recession, only nine states experienced job losses of 5 percent or more, whereas 21 states had job losses of 5 percent or more, including Nevada, which lost 11.6 percent of its jobs, during the most recent downturn, the report showed.

While the November jobs report released by the Labor Department reflected an increase in unemployment, some economists have said it's likely a bump in the road heading into next year, with businesses signaling their willingness to accelerate hiring in the next several months.

The economy is showing positive signs of growth heading into 2011, with the index of leading economic indicators increasing 1.1 percent in November, the biggest jump since March, when the index jumped 1.4 percent, according to Conference Board's report released last week.

Consumer and holiday spending also are looking good, and industrial production and homebuilding are showing signs of life, all of which bodes well for the sluggish labor market.

Meanwhile, as unemployment plagues most states, seven will modestly boost their minimum wage in 2011, affecting more than half a million workers and increasing the number of states — to 17 — that are paying more than the national base hourly wage.

Arizona, Colorado, Montana, Ohio, Oregon, Vermont and Washington state will increase hourly wages that will range between nine and 12 cents more for about 647,000 workers effective Jan. 1, according to the National Employment Law Project (NELP).

The national minimum wage is $7.25 an hour, but several states have set hourly wages above that rate.

The indexed increases came through ballot initiatives in all of the states except Vermont, which voted for the increase in 2005.

“Regular increases in the minimum wage that help workers keep up with rising living costs are critical during tough economic times and directly benefit workers and state economies,” said Christine Owens, executive director of the NELP.

The federal minimum wage pays about $15,000 a year. Around 75 percent of those earners are age 20 and older and more than 60 percent are women, most likely meaning that most of those workers support families, according to the Labor Department.

“In addition to helping working families in the states make ends meet, raising wages for the lowest-paid workers will help sustain consumer spending and spur economic recovery," Owens said.

New Census Bureau data show that there were more than 10 million low-income working families in 2009. Between 2007 and 2009, the share of working families who are low-income, earning less than 200 percent of the official poverty threshold, increased from 28 percent to 30, according to a report released this week by the Working Families Project.

A recent NELP study suggests that the majority of new jobs created during the economic downturn are in the low- and mid-wage industries. NELP also cited a separate study published in November in the Review of Economics and Statistics that finds that while minimum-wage increases boost wages, they don't cause job loss.

“The paper presents a fairly irrefutable case that state minimum wage laws do raise earnings in low-wage jobs but do not reduce employment to any meaningful degree,” said David Autor, professor of economics at the Massachusetts Institute of Technology and editor of the Journal of Economic Perspectives, in a statement.

Another recent study, to be published in April 2011 in the journal Industrial Relations, finds that even during times of high unemployment, including the most recent economic downturn, minimum wage increases have not led to job loss, according to NELP.

These are the states raising their minimum wage, and the number of people affected:

Arizona, $0.10; $7.35; 68,023
Colorado, $0.11; $7.36; 57,828
Montana, $0.10; $7.35; 11,043
Ohio, $0.10; $7.40; 269,527
Oregon, $0.10; $8.50; 87,511
Vermont, $0.09; $8.15; 10,305
Washington state, $0.12; $8.67; 142,477