November 2003 marked two years of recovery for the U.S. economy. Government reports have trumpeted the good news: growth in the gross domestic product reached its highest level in nearly two decades, businesses are investing again, and exports edged up slightly. But while the recovery finally appears to be gathering momentum, employment figures remain disappointing: Overall employment is down by more than 2.3 million jobs since March 2001, the beginning of the recession; Manufacturing employment has fallen for 40 consecutive months; The official unemployment rate in November 2003 is still 5.9 percent, having dipped below 6 percent for the first time in seven months; and The share of unemployed workers who have been out of work for six months or more increased to 23.7 percent, the highest level in more than 20 years.
This disjuncture between generally positive economic indicators and slow employment growth is explained in part by rising output per worker. Productivity gains have meant that businesses are able to increase output without hiring substantial numbers of new employees. In addition, businesses have been reluctant to hire in response to improving economic conditions, an indication that they are unsure about the strength of the recovery. For these reasons, businesses might be recovering, but workers are not.