RSS Feed MenuI keep seeing that chart that shows how employment declines in the current recession are so much worse than in past ones. You know, this one:
On many dimensions, of course, the current recession is much worse, but this chart has always seemed funny to me. And after reading Paul Krugman mock the idea that the recessions of the 1970s and 1980s were at all comparable, I decided to make my own damn chart. Because the above chart looks at employment levels, which are affected by labor force growth, I decided to look at employment rates instead (subtracting the unemployment rate for each month from 100). Because the composition of the labor force has also changed over time (lots more married women, most notably), I decided to confine to white men ages 20 and up. And because it’s unclear to me what “peak” is used in this chart (see the vague note at the bottom of Rampell’s chart) and since the relationship of the NBER business cycle peak to the unemployment rate involves a lag, I decided to measure from the peak employment level. Got all that? Here’s my chart:
I’ve labeled the lines the same way that Rampell’s chart is labeled, by the recessions that followed each employment rate peak. The figures are from BLS and are based on their seasonally adjusted series.
This approach makes clear why people were disappointed by the “jobless” recoveries from the recessions of the early 1990s and 2000s, which were no faster than after the much more severe recession of the early 1970s (though of course, the declines in employment were much smaller to begin with). More to the point, it also shows that while the current recession still looks bad, bad, bad, the decline in employment is comparable to the decline during the double-dip recession, which is apparent from the “1980″ line. That’s not the most fantastic news of course, but it’s worth noting. Unfortunately, I doubt this is the chart you’ll see others use and update as things evolve in the next few months.
Originally published at The Empiricist Strikes Back.
cdorsen // Aug 2, 2010 at 8:12 am
It appears that all the data suggests that after its all said and done with, people still don’t have jobs. TARP, the stimulus, omnibus spending, and the healthcare bill (remember: Pelosi said, “it is a jobs bill!”) and people still are out of work. Those of us who do still have jobs aren’t being paid enough. Kind of hard to ask for a raise when your company just had massive layoffs. And, when your buddies have been out of work for 8 months to a year, it doesn’t really seem like a good time to try your luck at a better job. Of course, federal government employment is up. If only we could all work in Washington!
But, all that changes in November, right!? Wrong. Even if the GOP does make a huge comeback, they have no agenda other than repealing the failed Obama agenda which they failed to stop. And, even that won’t succeed without a filibuster proof majority and Obama still holding the veto pen. We were promised hope and change, but it seems to me that America has as little hope as ever and nothing has changed. Of course, I know what we all need… Another 3000 page trillion dollar bill to solve all our problems. I feel better already.
Oldskool // Aug 2, 2010 at 8:54 am
Since you’re choosing demographics ala carte, you should also include a chart for white women, one for black women and one for black men in order to be “fair & balanced”. (Although I have the feeling that’s not the point of this exercise.) All charts should also allow for the change in the way unemployment numbers were calculated in the 1990’s.
sinz54 // Aug 2, 2010 at 9:09 am
The reason why this recession feels worse to so many Americans, is that so many of them have been unemployed longer.
Here’s a BLS chart on median unemployment duration:
http://i25.tinypic.com/69l3rs.png
The median duration of someone who’s unemployed in the current recession is more than 25 weeks–that’s six months. And that means that many Americans have been unemployed longer than that, for the better part of a year. That’s much worse than any other recession since the 1960s.
That’s due to structural problems that have accumulated: The burst of the housing bubble means that new housing starts are at a historic low; and jobs that were gone in this recession are not coming back because they’ve been replaced by automation and computers, or outsourced to other countries.
The duration problem doesn’t show up in any discussion of unemployment rates, due to turnover: Workers who have been unemployed even for a long time eventually find jobs, but others lose their jobs.
Another factor that doesn’t show up is that now we have a historic high of households where both husband and wife have to work. That means that high unemployment can affect more households:
Back in the 1950s, typically only the husband worked while the wife stayed at home. That meant that an unemployment rate of X percent affected X percent of the husbands, and therefore about X percent of the households.
Today, both the husband and wife have to work, typically. That means that an unemployment rate of X percent will result in
1 – (1 – X)^2 percent of the households with either the wife or the husband or both out of work.
For example, the current unemployment rate of 9.6% will mean that 18.2% of the households will find either the wife or the husband or both out of work.
That’s a lot of households.
LFC // Aug 2, 2010 at 10:38 am
More to the point, it also shows that while the current recession still looks bad, bad, bad, the decline in employment is comparable to the decline during the double-dip recession, which is apparent from the “1980″ line.
You’re missing a huge issue. Reagan had 3 effective tools at his disposal; rate cuts, tax cuts, and increased gov’t spending. He used all 3 and it still took us a while to dig out of the unemployment hole.
Due to the profligate Bush years, Obama does not have the freedom of movement that Reagan did on any of these choices. Gov’t rates are nearly 0% now, so effective rate cuts are impossible. Taxes are already at a historic low. Further cuts won’t be particularly effective. Also, behavior is different. Personal tax cuts are going towards the deleveraging of large amounts of personal debt. This is good and must be done, but it doesn’t increase consumer spending. Companies have record cash on hand and they won’t invest, so a corporate tax rate cut is useless.
That leaves government spending, but with a budget already pushed so far out of whack and dependent upon a gently tended debt and related derivatives bubble, we’re starting out in a $1T hole without any additional spending.
And the Republicans now tell us the answer is more of Bush’s policies. They really are trying to destroy our country for votes.
anniemargret // Aug 2, 2010 at 11:16 am
LFC: “And the Republicans now tell us the answer is more of Bush’s policies. They really are trying to destroy our country for votes.”
Ditto.
I don’t trust a single thing that comes out of the mouths of Republicans. Their entire message is one based upon Obama ‘I hope he fails’ wish. I don’t feel the Republicans have an urgent message to Americans other than resistance against any progressive reform, blind support for tax cuts (why don’t let them expire to offset some of the deficit, huh? – they speak with forked tongue), and the same stupid smarmy ‘cojones’ remarks from the leader, Mama Grizzly Sarah Palin.
I will continue to take my chances with Democrats.
freedomrings // Aug 2, 2010 at 12:01 pm
I’m struck by how different the numbers are for the 1980’s recession between the two graphs. I believe the only difference is that rates are normalized by the number of people who say they’re looking for a job (the job force), therefore this number behaved wildly differently in the 1980’s than it did for all other recessions. Since the employment rate was so low while the employment level was so high, the work force actually grew during the 1980’s recession (or at least shrunk significantly less than the other recessions). I wonder what that means.
balconesfault // Aug 2, 2010 at 12:04 pm
Today, both the husband and wife have to work, typically. That means that an unemployment rate of X percent will result in
1 – (1 – X)^2 percent of the households with either the wife or the husband or both out of work.
For example, the current unemployment rate of 9.6% will mean that 18.2% of the households will find either the wife or the husband or both out of work.
That’s a lot of households.
Since I’m lazy to put my statistics cap on this morning … what percentage of households will have at least one family member employed?
BTW – in another thread, WillyP declared that we’re not in a recession … we’re in a “Deep Depression”. So there!
freedomrings // Aug 2, 2010 at 12:04 pm
Wait, is the top graph for all adults and the bottom graph for white males? If so, this is a completely pointless comparison!
sinz54 // Aug 2, 2010 at 12:24 pm
balconesfault:
Just remove the “1 -” in the expression I posted.
For example, if the unemployment rate is 9.6%, then that means that 90.4% of Americans who are interested in work (not retired or disabled) are still employed. If you pair them up (by marriage), then that means that (.904)^2 or 81.7% of households have both husband and wife employed.
But 81.7% is terrible, comparable to the number of households still employed during the Great Depression of the 1930s.
My calculations assume independent trials, which I admit isn’t entirely true. It’s unlikely that a husband (or wife) will move away from her spouse to a new locale, just to take a job there. So if the couple lives in an area of relatively robust employment, it’s more likely that both of them are still employed. If they live in an area of relatively poor job prospects, then it’s more likely that both of them are unemployed. Even if one of them could find a job in another state far from their spouse. Because it’s tough to leave your spouse. Or to pull up stakes when you’re already underwater on your mortgage and can’t sell your existing home.
more5600 // Aug 2, 2010 at 2:05 pm
Must be a Republican economist, he only counts white males…
balconesfault // Aug 2, 2010 at 3:48 pm
Sinz – nope – because there is some number of households in your calculation where both the husband and wife are unemployed.
And THAT is the proper comparison to the unemployment rate during the 1930’s, when most families were husband worker only.
It is tough on a family for only one spouse to be employed for a period of time (tougher yet if they’re not getting an unemployment check for the other). That is nothing compared to neither spouse having a job.
Telly Davidson // Aug 2, 2010 at 4:24 pm
Sinz sez: “….(and the) jobs that were gone in this recession are not coming back because they’ve been replaced by automation and computers, or outsourced to other countries…”
He shoots… he scores… the crowd goes wild! Thank you, Sinz. All of my adult life I’ve heard left-wing demagogues like Michael Moore and Thomas Frank say that if it wasn’t for Evil Reagan and Old Bush, we’d still have our 1950s, “Leave it to Beaver” middle-class economy — while the “bitter” right wing clung to “guns and (far-right) religion”. Both sides spent the 1990s pretending the 1991-94 recession (and much of the current one) was just another 1970s-style slowdown — simply denying that we were in a New Economy, a second Industrial Revolution (no matter whose “fault” it was) and the old rules just didn’t apply anymore. Instead, people were given all this coulda-woulda-shoulda and “what ifs” that did absolutely nothing to help them adapt to the new paradigm and absolutely everything to stoke class/race hatreds and jealousies for political gain.
Sometimes the cold hard truth sucks, but there’s no substitute for it.
easton // Aug 2, 2010 at 4:42 pm
“It’s unlikely that a husband (or wife) will move away from her spouse to a new locale, just to take a job there.” Not true, I spend the school year in Mexico and vacations in the states while my wife finishes her degree in the states. I know a lot of people who do likewise. And I know a lot of people where one spouse stays home, shall they be counted as unemployed when it is voluntary?
sinz54 // Aug 2, 2010 at 6:03 pm
balconesfault: It is tough on a family for only one spouse to be employed for a period of time (tougher yet if they’re not getting an unemployment check for the other). That is nothing compared to neither spouse having a job.
Obviously having both husband and wife unemployed is worse than either one alone.
But even when just one income stops coming in, that may mean the family is no longer able to pay their mortgage payments, their car payments, and their children’s college education. Which of those would YOU sacrifice first?
See, you’re seeing two incomes as a financial cushion, whereas I see it as a crutch. A household got used to having two incomes and spent money accordingly: On cars, on homes, on college, etc. Cutting back is hard; because once you take out loans to pay for those things, that’s a commitment you can’t just welch on.
And I doubt that either Bush or Obama could get American families to accept the argument that “Too bad that Mom or Dad is unemployed; just be happy that BOTH Mom and Dad aren’t unemployed.” That’s going to be a tough sell in the upcoming election campaign season.
Anyway, since you asked:
Make a Venn diagram of the unemployed, where the total percentage of households affected by unemployment is 18.2%, the percentage of unemployed husbands is 9.6%, and the percentage of unemployed wives is 9.6%. The intersection of wives and husbands (to avoid double counting) would be 1.0%, the percentage of households where both the husband and wife find themselves out of work at the exact same time.
http://en.wikipedia.org/wiki/Venn_diagram
There will still be plenty of other households where the husband and wife were both out of work, but at different times so that the periods of unemployment don’t overlap. That’s impossible to calculate without more information.
sinz54 // Aug 2, 2010 at 6:15 pm
Telly Davidson: All of my adult life I’ve heard left-wing demagogues like Michael Moore and Thomas Frank say that if it wasn’t for Evil Reagan and Old Bush, we’d still have our 1950s, “Leave it to Beaver” middle-class economy
Actually, to his credit,
Michael Moore has admitted that he doesn’t believe General Motors is ever going to be able to compete head-to-head with Honda on building high quality cars that will lure Americans back to Detroit’s models. His suggestion to Obama was to retool GM to produce bullet trains, solar panels, just about anything other than attempting to win market share of small cars back from Honda.
http://www.michaelmoore.com/words/mikes-letter/goodbye-gm-by-michael-moore
Obama didn’t listen.
Too bad.
That was one of the very few times that Moore was right.
jquintana // Aug 2, 2010 at 8:13 pm
sinz54 // Aug 2, 2010 at 6:15 pm:
“[Michael Moore's] suggestion to Obama was to retool GM to produce bullet trains, solar panels, just about anything other than attempting to win market share of small cars back from Honda.
Obama didn’t listen.”
There is only one reason Obama ’saved’ GM and didn’t ‘allow’ them to file for Chapt 11 bankruptcy and restructure their business. He did it to save the UAW so that the auto workers union would continue to fill Democrat Party coffers will large campaign donations.
It’s a shame, really…if Obama hadn’t insisted on saving GM and propping them up with $25 billion in taxpayer (read: you and me) funds, they would have been able to kick the bloodsucking UAW to the curb and come out of the restructuring process leaner, meaner, and profitable. Instead, we’re left with a zombie dinosaur relic of a company who makes cars for an aging, dying demographic, and who requires government (life) support for the foreseeable future.
I don’t want to own a part of GM. If I wanted to own a part of GM, I would buy stock in their company. But the company builds lousy cars and they lose money, so I’m not interested in buying their stock. In fact, their cars are so terrible, most people wouldn’t even consider buying a GM car, so what happens to a company like that? They either go out of business or they learn how to build products people want. That’s how the free market works. But now, the government is forcing me, and all my fellow citizens, to own a part of GM to save their corrupt union. Thanks, Obama. Thanks, Democrats.
JonF // Aug 2, 2010 at 9:06 pm
Re: There is only one reason Obama ’saved’ GM and didn’t ‘allow’ them to file for Chapt 11 bankruptcy and restructure their business.
I assume you are posting from an alternate universe because in this one GM and Chrysler both filed Chater 11 last year and restructured their debt accordingly. The jury is out on Chrysler, but GM looks likely to recover, albeit not to its onetime glory days of total market power.
And by the way, Obama’s policy toward both automakers was simply a continuation of George Bush’s.
jquintana // Aug 2, 2010 at 9:48 pm
JonF // Aug 2, 2010 at 9:06 pm
“I assume you are posting from an alternate universe because in this one GM and Chrysler both filed Chater 11 last year and restructured their debt accordingly. The jury is out on Chrysler, but GM looks likely to recover, albeit not to its onetime glory days of total market power.”
Right, my mistake. However, I find it despicable that the government owns 61% of GM and UAW owns nearly 17.5% of GM…if they were allowed to eliminate their union contacts and go set up shop in a right to work state (like BMW and Honda), they would have come out of this mess a much healthier enterprise. $41,000 Volt anyone? I didn’t think so.
“And by the way, Obama’s policy toward both automakers was simply a continuation of George Bush’s.”
I didn’t like George Bush’s policy either – he almost single-handedly destroyed the Republican Party for about a 4-6 year stretch.
balconesfault // Aug 2, 2010 at 10:02 pm
Sinz: His suggestion to Obama was to retool GM to produce bullet trains, solar panels, just about anything other than attempting to win market share of small cars back from Honda.
Sinz, your reading for comprehension sometimes is sorely lacking. I just read the piece, and nowhere does Moore say anything about not attempting to win market share of small cars back from Honda.
What he does offer is his own perspective … essentially that the days of the internal combustion engine are fading (too bad nobody was talking about that 10 years ago … oh, wait), and that all of GM’s industrial infrastructure would be put to better use making turbines and bullet trains and other components of a new energy/transit paradigm.
He’s not saying that GM can’t win market share from Honda – he’s saying that GM shouldn’t bother, because the real money in the future is elsewhere.
Not bad advice, except think of the SOCIALISM screams from the right as Obama’s team tries to restore GM to a long-term positive balance sheet so it can be sold back to the private market as an automaker and recoup our national investment. Now imagine the volume of those screams if Obama had instead decided to convert GM into something other than an automaker. Sheesh. Seriously.
Anyway, it is extraordinarily premature to be declaring GM unable to compete. The 2011 line is getting some very good reviews, including the 40 mpg Chevy Cruze, and if the Vue plug-in hybrid comes out on schedule it could be a huge seller.
Oh – and some of us don’t consider the US autoworkers to be an enemy.
jquintana $41,000 Volt anyone? I didn’t think so.
They will sell like hotcakes.
jquintana // Aug 3, 2010 at 7:25 am
balconesfault // Aug 2, 2010 at 10:02 pm
“They [Chevy Volts] will sell like hotcakes.”
If you take at look at the regions in the country where Priuses have predominantly been sold, they’re concentrated in the ‘4 Bs’ — Brentwood, Beverly Hills, Bel Air, and Berkeley. These people overwhelmingly don’t buy American, and particularly not Chevys, although you may see the occasional Wrangler or Escape Hybrid.
My hunch is that they’ll look at the Leaf ($31,000 with 100-mile range before needing a charge) and compare it with the Volt ($41,000 with 40-mile range before needing a charge) and they’ll go with the Leaf 99 time out of 100. Knowing these people like I do (I worked in the film industry in L.A. for years) they would most likely go with the Leaf even if price/performance were equal, because Japanese cars are far more dependable.
All you have to do is ask yourself this: Would YOU buy a Volt if you had $41,000 to spend on a new car?
As far as the rest of the country goes? New York and Chicago will stick with their Beemers and Benzes and take mass transit to work, and most of the rest of the country won’t be able to afford it or just won’t give a damn.
Hate to say it, but the Volt is gonna flop. GM should have released it in the 90s, but they were too fixated on huge gas guzzlers at a time when they should have been more forward-thinking. GM has been mismanaged into the ground, and I’m furious that we’re stuck with the price tag of bailing out their worthless butts.
LFC // Aug 3, 2010 at 10:21 am
jquintana said… If you take at look at the regions in the country where Priuses have predominantly been sold, they’re concentrated in the ‘4 Bs’ — Brentwood, Beverly Hills, Bel Air, and Berkeley.
Jeesh! Yet another Google challenged commenter spouting something ridiculous that is easy to debunk. In the last five full years (2005-2009), they sold just short of 700,000 Priuses. Not bad for “the 4 B’s”. Who knew they bought soooooo many cars? (They’ve sold over 2M Priuses worldwide since it was debuted.)
It’s no wonder the right-wingnuts lap up the crap served up hot and steaming by the likes of Limbaugh, Beck, Coulter, Levin, Savage, etc. That goes double for their lying political leaders like Palin, Bachmann, Boehner, McConnell, Gingrich, Cantor, etc. They simply don’t have the gene that causes them to question their leaders.
jquintana // Aug 3, 2010 at 11:59 am
LFC // Aug 3, 2010 at 10:21 am:
“Jeesh! Yet another Google challenged commenter spouting something ridiculous that is easy to debunk. In the last five full years (2005-2009), they sold just short of 700,000 Priuses. Not bad for “the 4 B’s”.they’re concentrated in the ‘4 Bs’”
First of all, read my entire post—I said that if you take at look at the REGIONS (implying that they’ve sold sold in other regions) in the COUNTRY (this country, the USA) where Priuses have PREDOMINANTLY been sold, they’re concentrated in the ‘4 Bs’…I didn’t say they were ONLY sold in that region, and I didn’t say the MAJORITY of them were sold in that region. Read my words carefully next time. Perhaps the word ‘predominantly’ confused you…next time I’ll use the expression ‘a heck of alot.’
I received that information from a very close friend of mine who received a Ph.D in environmental science from UCLA in 2009, who is 2nd in command at CARB (California Air Resources Board) as Science and Technology Advisor to the Governor, wrote 2 books on environmental policy, and is a foremost expert on the proposed Cap and Trade program with over 20 years experience in government in Washington DC and California in environmental policy.
She was citing a study by one of her professors at UCLA…you can find it here:
http://www.ioe.ucla.edu/reportcard/article.asp?parentid=2304
Next time, try to use something other than Wikipedia to round out your education on a subject. But then again, I suppose you probably don’t possess that gene.
balconesfault // Aug 4, 2010 at 1:08 am
My hunch is that they’ll look at the Leaf ($31,000 with 100-mile range before needing a charge) and compare it with the Volt ($41,000 with 40-mile range before needing a charge)
My hunch is that you don’t understand the fundamental differences between the Leaf and the Volt, and the implications for how one can use their vehicle.
Here’s one hint. When the Leaf reaches its 100 mile battery range – you have to find a 220-v outlet and charge it for 6 hours or so. When a Volt reaches its 40 mile battery range – you pull into the nearest gas station and keep driving.
So if you’re a multi-car family and dedicating the Leaf for in-town trips and commutes with another ICU vehicle for longer drives, it makes great sense. In fact, we’ve already plunked our $99 reservation fee down on one, with the idea of giving our 2001 Prius (one of the first shipment to town, with 150K miles on it) to our son when he graduates college next May (I’m guessing the Leaf comes available here around that time).
If you’re a single person who isn’t going to own multiple vehicles, the Volt is definitely the way to go, giving you the option of electric powered trips for short range, but no battery anxiety since the car will run on gasoline as needed to get you from city to city and back.
Oh – and my town is FULL of Priuses, and it starts with an “A”. I bought one right away because I did the math and calculated about an 8 year break even on the investment versus comparable ICU only sedans. As it turns out, the 2007 gasoline spike made us hit our break-even quicker than that.
jquintana // Aug 4, 2010 at 7:17 am
balconesfault // Aug 4, 2010 at 1:08 am:
“When the Leaf reaches its 100 mile battery range – you have to find a 220-v outlet and charge it for 6 hours or so. When a Volt reaches its 40 mile battery range – you pull into the nearest gas station and keep driving.”
You’re right, and thanks for pointing out that very important distinction. That makes the Volt a plug-in Prius (which nobody will bother to plug in because all you have to do is ‘pull into the nearest gas station and keep driving’) for $41,000. Then add in the fact that Chevys are notoriously unreliable and will habitually break down on you as soon as the warranty expires, and you’ve got one helluva bargain.
I won’t be buying one.
balconesfault // Aug 4, 2010 at 11:08 am
That makes the Volt a plug-in Prius
No – the Prius has a 13 mile range on electric power only. 40 mile range makes exclusive electric power driving feasible for many commuters … 13 mile range almost guarantees you’ll be having to hit the gas station regularly.
Then add in the fact that Chevys are notoriously unreliable and will habitually break down on you as soon as the warranty expires, and you’ve got one helluva bargain.
What we have here is a person so determined to see anything that Obama touches fail, that he’s willing to root against America’s success.