Unemployment by the Numbers: Parsing Tim Geithner’s Testimony

Today, Treasury Secretary Tim Geithner called the unemployment rate in the United States “unacceptable by any metric.” Of course, he then warned that it would likely go up before it goes down, so it’s unacceptable, but it will continue to occur. But the real question for many unemployed Americans — or Americans entering the workforce — is when unemployment might be back down to pre-recession levels. Geithner didn’t answer that, but we can do the math.

To date, 8.4 million jobs have been lost due to the recession. About 15 million people are unemployed; an additional 8.8 million people are employed part-time because they can’t find full-time work; and 2.5 million are considered “marginally attached” to the labor market but not officially unemployed because they’ve looked for work in the last year but not the last four months, indicating that they wanted to work but have given up trying to find any. The government considers the labor market to include 153.5 million people — counting those who are part-time employed but not those who are marginally attached — so a more accurate reflection of the overall un- and underemployment rate is about 16.8 percent.

The average U.S. unemployment rate before the economic crisis (not including the last recession) was about 4.5 percent (about 7 million people) — though, if you add in those who were involuntarily employed part time (4.2 million) and those marginally attached (1.5 million), the overall underemployment rate was about 8.2 percent. To get back to this number of employed people, you’d need to get 13.7 million Americans back to work in full-time jobs.

Geithner said today that he expects the economy to create an average of 100,000 jobs a month this year, 200,000 a month next year and 250,000 a month in 2012. But, as we know, about 100,000 new people enter the workforce each month, meaning that job creation this year will only match the number of new people needing jobs. Geithner expects the economy to create a 100,000-jobs-a-month surplus in 2011, adding 1.2 million jobs to the economy, and a 150,000 job a month surplus in 2012, or 1.8 million jobs. That means the economy, by the 2012 elections, will have added back three million jobs to the economy beyond what is needed to account for new market entrants — despite the loss of 8.4 million jobs to date and the need to get 13.7 million Americans back to work.

Even if one assumes that 100,000 new job seekers a month will be offset by 100,000 retirees a month — not an easy thing for people to afford to do with the stock market’s effect on retirement accounts and Social Security not offering a cost of living adjustment this year — the best-case scenario is that the economy adds 6.6 million new jobs by 2012, which is two million shy of the number of jobs that disappeared during the recession and less than half the number of Americans that need to get back to work full-time to bring unemployment down to pre-crash levels.

In other words, if “it’s the economy, stupid,” 2012 is going to be a bad year for Obama to face re-election.