Academic journal article Monthly Labor Review

Great Recession, Great Recovery? Trends from the Current Population Survey

Academic journal article Monthly Labor Review

Great Recession, Great Recovery? Trends from the Current Population Survey

Article excerpt

This article uses data from the Current Population Survey to examine the state of the U.S. labor market 10 years after the start of the Great Recession of 2007-09. By December 2017, unemployment rates had returned to prerecession lows for people of all ages, genders, major race and ethnicity groups, and levels of educational attainment. However, the long-term decline in labor force participation continued during this recovery, while long-term unemployment and involuntary part-time employment remained elevated.

It has now been a decade since the start of the Great Recession--the most severe economic downturn in the United States since the Great Depression. (1) In a 2-year span starting in December 2007, the unemployment rate rose sharply, from about 5 percent to 10 percent. In late 2009, more than 15 million people were unemployed. Total employment, as measured by the Current Population Survey (CPS), (2) dropped by 8.6 million, or almost 6 percent. In 2010, however, the U.S. economy and labor market began to recover. By December 2017, the unemployment rate had fallen to 4.1 percent. Employment had grown by 16.0 million, reaching a level about 5 percent higher than that in November 2007. However, not all U.S. labor market indicators had returned to their pre-Great Recession levels. The number of long-term unemployed, especially those who had been jobless for a year or more, remained elevated. The ranks of those working part time involuntarily were still sizable. In addition, long-term trends, such as the decline in labor force participation, continued throughout the recession and recovery. This article uses CPS data on unemployment, labor underutilization, labor force participation, employment, and earnings to analyze how the U.S. labor market has recovered from the Great Recession.

Unemployment

The unemployment rate represents the number of people who are jobless, looking for a job, and available for work, as a percentage of the labor force (all people who are employed or unemployed). During the 2007-09 recession 3 the unemployment rate more than doubled. (See figure 1.) The rate increased by 5.3 percentage points since November 2007, peaking at 10.0 percent in October 2009, when more than 15 million people were unemployed. This peak marked the highest unemployment rate since the aftermath of the 1981-82 recession, when the rate exceeded 10 percent for 10 consecutive months, from September 1982 to June 1983. The rate began to trend downward in April 2010, with sharper declines starting in January 2012. Between January 2012 and January 2016, the rate fell from 8.3 percent to 4.9 percent-an average decline of 0.9 percentage point per year. After holding steady for the first three quarters of 2016, the rate resumed its decline in the fourth quarter of 2016 and continued to fall throughout much of 2017. By December 2017, the unemployment rate had dropped to 4.1 percent, the lowest reading since December 2000.

During and immediately after the recession, the unemployment rate increased markedly for people in all age, gender, race, ethnicity, and education groups. Groups with historically higher unemployment rates, such as young people, Blacks or African Americans, and those with less than a high school diploma, continued to experience higher unemployment rates throughout the recession. During the labor market recovery from 2010 onward, the unemployment rates for all groups declined. By December 2017, the rates had returned to--or fallen slightly below--their respective prerecession levels.

Following the recession, unemployment was higher among men than among women. The unemployment rate for men reached 11.1 percent in October 2009. Women fared mildly better. While the unemployment rate among women peaked at 9.0 percent in November 2010, it was at least 2 percentage points lower than the rate for men for over a year (March 2009 to April 2010). This was the largest gap between male and female unemployment rates since the 1970s. …

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