BY FAR THE MOST WIDELY NOTED and puzzling aspect of the current economic recovery is its failure to create jobs. While payroll employment in seven previous recessions increased a full 7 percent in the first twenty-three months following the NBER business cycle trough, such employment increased by only 0.8 percent-just over one-tenth as much-from March 1991 to March 1993. Part of the explanation of negligible job growth lies in the recovery’s relatively slow pace of output growth, which has been little more than one-third the usual postwar pace.
