Understanding the “Job-Loss Recovery”

Public Policy Brief No. 04-1

This Public Policy Brief presents analysis of the labor market by economic research staff at the Federal Reserve Bank of Boston. It is based on materials originally presented to the Board of Directors of the Boston Fed on April 8, 2004, with selective updates incorporating data reported in early June. Contributors to this brief include David DeRemer, Jeffrey C. Fuhrer, Kristina Johnson, Jane Sneddon Little, Radoslav Raykov, Scott Schuh, Geoffrey M.B. Tootell, Robert Triest, and Anne van Grondelle. Views expressed in this brief do not necessarily reflect the views of the Federal Reserve System.

The brief comprises three complementary but standalone sections.

  • Section I describes the unusual characteristics of the current recovery to date, explains why it has been termed the “job-loss recovery,” and analyzes the magnitude of the “employment gap” and the rate at which employment must grow to close the gap by the start of 2006.
  • Section II addresses outsourcing, which some have blamed for the job malaise.
  • Section III explores the role of productivity and costs as possible explanations for sluggish employment growth.

Full-text brief pdf