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Unemployment Before, During, and After the Great Recession

Explore the impact of unemployment trends before, during, and after the Great Recession, analyzing labor market behaviors and government surveys. Learn about causes, alternative measures, and the evolving job landscape. Uncover the changing dynamics of male and female labor force participation rates and the challenges faced by different age groups in the labor market.

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Unemployment Before, During, and After the Great Recession

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  1. UnemploymentBefore, During, and After the Great Recession Dr. Norm Cloutier, DirectorUW-Parkside Center for Economic Education 23rd Annual ASET Meeting Milwaukee, WI December 7, 2012

  2. Measuring Labor Market Performance • Household Survey • Current Population Survey of 60,000 hh regarding labor market behavior in the “reference week.” • Establishment Survey • Current Employment Statistics (CES) surveys 141,000 businesses and government agencies, 486,000 individual worksites.

  3. Categorizing Labor Market Behavior • In the Labor Force (civilian, noninstitutionalized, ≥ 16 years-of-age) • Employed: Worked in reference week. • Unemployed: Did not work in reference week, actively sought employment in last 4 weeks, and was available to work. • Not in the Labor Force: Did not work, did not look for work in the reference week, or was unable to work. • Marginally Attached: Want a job, looked in the last 12 months (but not last 4 weeks), are available. • Discouraged Workers: Not looking because of economic conditions.

  4. Headline Unemployment: U3 Oct 2009 10.1% Oct 2012 7.9% Percentage

  5. Labor Force Participation Rate Apr 2001 67.3% Oct 2012 63.6% Percentage

  6. The Amazing Disappearing Worker • Decades-long decline in male 25-54 LFP • 1970: 96.0% 2012: 88.5% • Aging Boomers: “The Pig in the Python” • We may soon reach 10,000 new retirees perday • Recession: • Discouraged Workers • Premature retirement • Public policy: • Relaxed standards for disability

  7. Male and Female Labor Force Participation: 1948-2011 Percentage

  8. LFP rate of prime working age population peaked in 2000 Oct 2012 81.5% % in the labor force

  9. LFP Rate of ≥ 65 has been increasing since 1985 Oct 2012 18.4% % in the labor force

  10. … but there are soooo many more of them: the “pig in the python” is aging Past 12 months averaged 6,500 new “seniors” per day Thousands

  11. Increasing share of working age population is disabled Oct 2012 5.4%

  12. Alternative Measures of Unemployment: U5 and U6 Oct `12 14.6% Percentage Oct `12 9.3%

  13. Causes of Unemployment? • Traditional Categories: • Seasonal, Frictional, Structural, Cyclical • Demand-side: • Insufficient aggregate demand • “balance sheet” recession • risk averse financial institutions • Supply-side • Public policy: unemployment insurance, food stamps, Medicaid, taxes, regulation, • “Uncertainty”

  14. The “Chart of Doom”: Job Loss as Percentage of Total Employment Peak 28 32 48 cumulative % change in total employment Lost > 500,000 jobs/month, Oct `08 – Apr `09 Job Trough Feb 2010 8.76 mil jobs lost ― 1981 ― 1990― 2001 ― 2007

  15. Job Loss as Percentage of Total Employment Peak March 2010 cumulative % change in total employment 2007

  16. Government Jobs During Employment Contraction months since employment peak 2001 cumulative % change in government employment 2007 1990 1981

  17. Government Jobs During Employment Expansion 1990 2001 cumulative % change in government employment since trough 1981 2007

  18. Private vs. Government Jobs During Employment Expansion: 2001 vs. 2007 Recessions 2007 Private 2001 Private cumulative % change in employment since trough 2001 Public 2007 Public

  19. Job growth by selected industries during contraction—expansion phases of the 2007 recession ??? 11% FIRE 6% Leisure 10% Government 16% W&R Trade 15% Construction 4% Prof & Bus Serv 13% Manufacturing 9% Transport & Warehouse 3% Local Public Education 6% *%= industry’s percentage of overall employment

  20. Since March 2009 initial unemployment claims have been declining

  21. … the average length of unemployment seems to have stabilized Weeks

  22. Unemployed ≥ 27 weeks as % of total unemployed Percentage

  23. Improving conditions for job seekers?:unemployed, job openings, and quits 6.7* 3.4* 2.9* 1.4* thousands *ratio unemployed to openings 1.1* Date

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