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Unemployment Before, During, and After the Great Recession

Unemployment Before, During, and After the Great Recession. Dr. Norm Cloutier, Director UW-Parkside Center for Economic Education 23 rd Annual ASET Meeting Milwaukee, WI December 7, 2012. Measuring Labor Market Performance. Household Survey

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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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