Come Friday, the Bureau of Labor Statistics will release its latest jobs situation report. Once again, the numbers will be dissected for signs of hope that the anemic hiring of the past year has finally shifted into a higher gear or that it is about to. With 14.5 million Americans still officially out of work and at least another 11 million underemployed or having given up looking, something on the order of 250,000 new jobs added in January with the prospect of another 250,000 this month would be welcome news indeed. Job creation at that level, good jobs at decent pay, would take some of the bitterness out of the word "recovery" we've been hearing for the past 19 months.
A key statistic – one which is all too often buried deep or not found at all in media coverage of the BLS report – is the labor force participation rate. That's the ratio between the people who have a job and who would like to have a job and the working-age population. Twelve Januaries ago, in 2000, that rate was 67.3 percent. This past December, it was 64.3 percent, its lowest level in 27 years, and still falling. The drop in the ratio over the past decade, and particularly during the recession and its aftermath, does not make for a pretty picture.
Nor does a new briefing paper written by Rebecca Thiess for the Economic Policy Institute. Titled The Great Recession’s Long Tail: Third anniversary Underscores Severity of Labor Market Woes, the introductory paragraph tells the story so many Americans have been living since the turn of the century:
The economic expansion that took place during much of the last decade officially ended in December 2007. One of the weakest on record, it saw feeble gross domestic product and jobs growth, and was the first business cycle on record during which the median family income failed to rise. The real value of the minimum wage declined for more than half the decade, and the gap between the rich and the poor—or rather the top 1% and the bottom 99%—continued to grow. This historically weak expansion, however, was nothing compared with what was to come. (In fact, the 2000s’ historically lack- luster expansion failed to generate the potential cushion a robust expansion would have afforded many families, making the current economic downturn even tougher to weather). The Great Recession, which began in December 2007, officially lasted through June 2009. Three years after the recession’s beginning we can piece together a comprehensive vision of where we have been, and begin to think about where we are going.
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Just how much worse the record-breaking Great Recession has been can be seen in Figure A, which compares the 10 post-World War II recessions that preceded it. The labor market remains down a larger percentage of jobs (5.2%) than at any point in any other postwar downturn. Even two years after the recession began, layoffs were still happening.
In terms of job loss, it was deeper than all the previous recessions, and job recovery is also destined to take much longer. In the shallow recession of 2001, it took 47 months for as many people to be working as were doing so at the prerecession peak, by far the longest postwar stretch. Even at 200,000 new hires a month, job recovery to the pre-recession peak this time around could take another 36 months. The Congressional Budget Office predicts that in January 2013, six years after the Great Recession began, the jobless rate will still be 7.8%. That's higher than the peak unemployment rate during the 1990-91 recession.
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That's not all. While jobs were being lost, the population grew. Thiess writes: "Figure B shows that the recession has left us with a shortfall of 11 million jobs, which includes the number of jobs it would have taken to maintain a stable employment rate while keeping pace with growth in the working-age population since the beginning of the recession. The labor market has 7.2 million fewer jobs than when the recession started; it is also down the 3.7 million jobs needed over the last three years in order to match population growth."
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Figure E shows the difference in unemployment rates for whites, Hispanics and African Americans. (Asian Americans tend to have an unemployment rate at or slightly lower than for whites; the Bureau of Labor Statistics does not sample American Indians in enough numbers to accurately measure their unemployment rate, but based on other samples, it is far above that for other demographic groups.)
"Unsurprisingly," Thiess writes, "income losses during the recession have differed by race as well. Income losses for the median black family have been more than twice as large in percentage terms as they have been for white families. Between 2008 and 2009, for instance, white families experienced a 1.6% decline in real median income, while black households experienced a 4.4% loss."
In December 2007, the percentage of jobless Americans who had been unemployed for more than six months was 17.4 percent. A month ago, that percentage was 44.3 percent, a total of 6.4 million Americans.
The damage done to rank-and-file Americans by the Great Recession has not yet abated. While we're a far cry from the days two years ago when the economy was shedding 650,000 jobs a month, millions of Americans, many of them having exhausted their unemployment benefits (if they were lucky enough to be eligible for them in the first place), many of them having long ago spent their savings (if they were lucky enough to have any to begin with), many of them having lost their homes to foreclosure, still cannot find work. And when they do, many of them are taking pay and benefit cuts or working reduced hours. Meanwhile, the stock market rises, corporate profits and bonuses are soaring and much of the crowd whose connivery helped bring on the Great Recession are quietly whistling "Happy Days Are Here Again."