It could take more than five years--longer than after any postwar downturn--to replace the millions of jobs lost to the 2008-09 recession. How can the US rev up its job creation engine?

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J U N E 2 0 11
M C K I N S E Y G L O B A L I N S T I T U T E
The growing US jobs challenge
It could take more than five years—longer than after any postwar
downturn—to replace the millions of jobs lost to the 2008–09
recession. How can the US rev up its job creation engine?

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The United States faces a daunting challenge in creating jobs: at current rates, it will
take until 2016 to replace the 7 million of them lost during the 2008–09 recession. To
million Americans expected to enter the labor force this decade—the US economy must
create 21 million jobs by 2020.
Only under the most optimistic of three scenarios that the McKinsey Global Institute
modeled would this be likely to occur, according to a new MGI report, An economy that
works: Job creation and America’s future. The study sheds new light on how companies
use labor, where new jobs are likely to come from, and what conditions are needed to
ensure that they can be created in a sustainable way. In addition to original research
and scenario analysis, the report draws on a survey of 2,000 business leaders, as well as
interviews with more than 100 business executives, public-­sector leaders, educators, and
other experts on US labor markets.
The United States has suffered from increasingly lengthy “jobless recoveries” following
months after GDP rebounded for employment to recover. But after the 1990–91 and 2001
more than 60 months will be needed to replace the jobs lost in the 2008–09 recession
(exhibit).
this decade: health care, business services, leisure and hospitality, construction,
the total number of jobs generated. Business services, for example, could create as many
without high school diplomas than employers can use.
that employers say they require. In our survey, 40 percent of the executives whose
nuclear technicians, and nursing aides, employers say.

3. employment levels but also open up opportunities. Broadband communications
and advanced IT systems make it possible to disaggregate jobs into tasks that can
be reassigned to other workers in a given location or elsewhere. Some work now
performed by physicians, for example, can be handed off to physician assistants or nurse
practitioners, creating demand for those middle-­income positions. Also, this approach
makes it easier to “onshore” service jobs to low-­cost US locations or even to workers in
their own homes.
Exhibit
Jobless recoveries: it used to take roughly six months for
US employment to recover after recessions, but in recent ones
that time span has increased dramatically.
Longer . . .
Months elapsed between return of real GDP to prerecession peak and
return of employment to prerecession peak1
1948 6
. . . and deeper
1953 7 % decline in employment from prerecession peak,
in months since recession began
0 12 24 36 48
1957 6
1960 6 Previous
recessions
1969 8
1973 3 2008 recession
Lowest point: 6.34%
1981 6
1990 15
2001 39
2008 >60 months
Projection, based on recent
rates of job creation
1Returns to prerecession peaks are established by start of more than 1 quarter above prerecession levels;; US recessions are
labeled by beginning year, with the exception of the most recent. The National Bureau of Economic Research estimates
that the current recession began in Dec 2007. GDP returned to its prerecession peak in Dec 2010.
Source: US Bureau of Economic Analysis;; US Bureau of Labor Statistics;; McKinsey Global Institute

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Related thinking The United States will not return to full employment by following a business-­as-­usual
“Translating innovation into
meet the jobs challenge, business and government leaders—and workers, too—must attack
US growth: An advanced-
industries perspective”
the obstacles to employment and have the courage to consider new approaches.
“Why US productivity can
grow without killing jobs”
“How US multinationals
drive economic growth” way to growth by making compliance with regulations less onerous.
“The economic cost of the
Read the executive summary or download the full report on the McKinsey & Company
US education gap”
Web site.
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