The current labor market expansion: third poorest performer 24 months after the recession’s end since 1948
It’s now two years after the end of the Great Recession, and the unemployment rate has ticked downward just 9 pps (percentage points) since its 10.1% peak. Pundits call this an expansion since GDP has fully retraced its recession losses; but the unemployment rate tells a very different story.
(click to enlarge)
The chart illustrates the unemployment rate after 24 months since each recession’s end spanning 1948 to June 2011. The business cycle dates are set by the National Bureau of Economic Research. The rates are indexed to the first month of each cyclical recovery for comparison, and the raw data are referenced in the table at the end of this post.
MORE AFTER THE JUMP!
Spanning the business cycles since 1948, the average decline in the unemployment rate is 20 pps from its peak to 24 months after the recession’s end. In the ’07-’09 ‘expansion’, the unemployment rate has fallen by less than half the average, -9 pps since the first month of recovery, July 2009.
In terms of relative labor market performance 24 months into the recovery/expansion, this cycle is the fourth worst – really the third worst since 24 months into the 1980 recovery is the 1981-1982 recession.
Technically, we’re not seeing a jobless recovery, since the unemployment rate peaked early on in the recovery (month 4); but it might as well be. Sticking with the household survey, employment (as opposed to the nonfarm payroll) is down by near 7 million since the economic peak and down 644 thousand since the recession’s trough. Yes, employment is net down since the recession ended. These numbers are affected by the annual population controls, but the trend (or lack thereof) is loud and clear.
The labor market is festering – we need a real policy response now.
Rebecca Wilder
Chart data (before index construction)
I don’t know what good it would do to offer a “real policy response” proposal, though. Policy makers — along with the serious people engaged in official policy debates — don’t give a flying fuck about unemployment… and they have the audacity to say it proudly. The Sandwichman offered a job-creation plan back in December of 2008. That’s two and a half years ago. In January 2009, Dean Baker jumped on the work less bandwagon with his proposal.
Here’s the deal: under the Carta de Foresta (the economic supplement to the Magna Carta), the common people have a guaranteed right to provision themselves from the common wealth of the nation. The principles of the Magna Carta apply to the U.S. through the Declaration of Independance, which in effect charged the British crown with violating the terms of the Magna Carta. “Unemployment” is a passive fiction used to cover up what is actually an active usurpation and violation of the legally-guaranteed rights of the common people. Much of “economic analysis” is not analysis at all but advocacy for the view that there is no such thing as the commons — “it’s a fallacy! it’s a tragedy!” –and that “those who steal the commons from under the goose” are perfectly entitled to do so as the result of some retroactive ritual of “abstinence.”
What I’ve written above sounds absurd. But that’s because the recoding of confiscation as abstinence has been so deeply embedded in the polemic of political economy that it is impossible to extract it without pulling down the whole edifice. And who wants to do that? O.K. once again, the charter of the forest legally guaranteed to the common folk the right to provision themselves from forests and fields of the land (that is to say, the means of production). This right was abrogated by enclosure and privatization of the commons and the beneficiaries violation of the rights of the people are credited by political economy as having earned their property though “abstaining from consumption”. Of course any abstinence that occurs is on the part of the common people who are UNLAWFULLY denied their right to provisioning.
… the beneficiaries OF violation fo the rights of the people…
..OF the rights…
Tom Walker,
I read your comment twice and still can’t make heads or tails of it. Are you stating that the Magna Carta voids property rights in 2011?
Your current comment makes you sound like a loon. Please clarify.
Islam will change
Tom, I do see what you are saying. Your last ppg kind of explains why some might not see it. Perhaps a clearer statement on the transition from baron ownership and private ownership might help clarify it.
Here is an email I just sent to David Leonhardt at the Times:
The consumer bust may never end as long as the US labor market remains a permanent pay squeeze market. It is more than plausible the US minimum wage could have risen to $15/hr from $10/hr (adjusted) as per capita income doubled since 1968. That means that half today’s workforce may plausibly be earning less than what the minimum wage should be — today’s median wage being $15/hr. If we could somehow have foretold this to Americans of 1968 they would not have labeled it as wan “inequality.” What “disaster”: small nuclear exchange, plagues, comet strike?
Any OECD labor market that works for the average person (and empowers same politically too) uses legally mandated, sector-wide labor agreements. All that do not work so nicely (e.g., Japan, Australia) do not avail themselves of this seemingly perfect labor market balancer — instituted to prevent a wage race to the top in postwar Europe.
Supermarket workers and airline workers would kill for sector-wide bargaining — easy political place to start. Never happen if no one ever informs 2011 Americans of what I fantasized informing 1968 Americans of.
New way to look at (literally) appraising the minimum wage: add one line within a line to ye ole 101 supply/demand chart always invoked against raising the minimum: show the labor component of the supply price. If the price of labor doubles — but is only 10% of the total cost of output — and demand consequently dropped only 10%: that sounds great for labor. Justice: simply explain that a market is only efficient (and fair) when all parties to a bargain are able to extract the maximum the other parties are really willing to pay.
PS. Isn’t inflation — I’m thinking labor market inflation — the classic way to diminish all debt (our grandchildren paying New Gingrich’s grandchildren because Newtie and friends these days lend the government money at interest instead of paying taxes) — and — doesn’t lowering real prices through inflation the classing cure for a housing bust?
thing is, the 2000 boom was a mirage given to us by $7T of added consumer debt:
http://research.stlouisfed.org/fred2/series/CMDEBT
previous recessions in my lifetime were caused by the Fed raising rates. When they lowered them, the economy came back.
We are not in this situation now. We done screwed the pooch 2002-2007 and there’s nothing to do but deleverage and adjust to the new normals.
It’s also my thesis that our $600B/yr trade deficit is utterly hollowing out the middle class.
wage inflation is great, but the Chinese work for $1.33/hr now.
buff, Tom is echoing the geoist philosophy that everyone has equal rights to the commons.
“Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise.Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right.”
— Thomas Jefferson
The job market is definately weak to say the least.
go check out DailyJobCuts , you will see the recovery is slow
Of course, the second poorest performance since 1948 is the last (2001) recession, which had two tax cuts to support its “recovery.”
It’s moments like that when I believe the Obama Administration is almost competent.
(The worst performance is one that Rebecca is too young to remember. Suffice it to say that most of us who lived and worked through it would follow Krugman’s recent example and treat the interregnum from July 1980 to July 1981 as more a caesura than a change of movements, rather in the manner that “the Great Depression” includes the period from 1933 to 1937 even if NBER calls it an upturn.
(And, yes, I will have the same attitude when NBER gets around to marking the beginning of the current recession as February or March of this year.)
Well, another possible explanation for buffy’s inability to understand what Tom wrote is that Buffy doesn’t read very well. Agree or disagree with what Tom wrote, but the meaning is pretty clear. Maybe if buffy weren’t so eager to denigrate views other than his own, he’d catch on quicker.
Hi Rebecca:
This reminds of listening to bankers asking for a Fed Rate increase in the 2000-somethings because they claimed the unemployment rate was low and the resulting labor market was tightening giving the impression of a higher inflation rate. At what point sine the end of the 2001 recession was the Labor market tight?
What I am going to say is nothing new. If we use the end of the 2001 recession Participation Rate as the basis for the Civilian Labor Force, the result is millions of people who are not included in the calcuation to make that graph. I would like to see those numbers added back into the calculation, the graph redrawn, and a comparison made. We never recovered. Is there a reason this would not be appropriate? I do not see the comparison as apples to apples.
Beyond those found in the “Texas miracle,” good paying jobs for the unemployed population of this nation is the most important policy this nation should pursue. Much of the deficit is caused by shortfalls in tax revenue and can be resolved with more people working. Couple such a policy with the ending of two wars and the proposed minor reduction in the tax breaks for the upper 3% of the taxpayers and the economy might indeed improve within the upcoming decade. Any other policy such as deficit reduction is a race to the bottom for most of America.