Research & Policy Brief

Similar documents
Research & Policy Brief Number 4 December 2009

National Economic Conditions. Cheyenne AIA Meeting February 25th, 2011 Rob Godby

The Urgent Need for Job Creation

CBO Projects More Severe Downturn

U.S. and New England Economic Conditions and Outlook

If the Economy s so Bad, Why Is the Unemployment Rate so Low?

We are in the midst of a weak and fragile recovery, with unemployment grinding

The State of Working Florida 2011

The Great Recession 1-2 Punch of Credit Crisis and Consumer Retrenchment

The next recession will not be. The Great Recession. Damon Runberg, Economist Oregon Employment Department

Economic and Revenue Update

CBER Indexes for Nevada and Southern Nevada

Figure 1: Change in LEI-N August 2018

South Georgia Business Outlook

How Long Will Wage Restraint Persist?

ADVANCE COMMENTARY NUMBER 930-A. December Labor, Private Surveying and M3, November Trade Deficit and Construction Spending January 5, 2018

cepr Analysis of the Upcoming Release of 2003 Data on Income, Poverty, and Health Insurance Data Brief Paper Heather Boushey 1 August 2004

New Mexico Continues to Struggle: Las Cruces doing better

The forecasts of the Labour Market Monitor

The Great Recession 1-2 Punch of Credit Crisis and Consumer Retrenchment

City of Modesto Economic Indicators December 2014 Edition

New Hampshire Medicaid Program Enrollment Forecast SFY Update

This Month in Real Estate

Common stock prices 1. New York Stock Exchange indexes (Dec. 31,1965=50)2. Transportation. Utility 3. Finance

An abnormally-slow December caps off the year with a range of bright spots as well as challenges. U.S. employment situation: September 2013

WESTWOOD LUTHERAN CHURCH Summary Financial Statement YEAR TO DATE - February 28, Over(Under) Budget WECC Fund Actual Budget

11 May Report.xls Office of Budget & Fiscal Planning

NATIONAL SUMMARY OF FIRST-TIME CLAIMANTS FOR UI

The Impact of the Recession on Employment-Based Health Coverage

Inflation Education. September Spear Street, Suite 950 San Francisco, CA Phone:

Key Labor Market and Economic Metrics

Commercial Real Estate Outlook June Must Own Property Names to Buy During Interest Rate Fears

December Employment Report: Further Deterioration of Labor Market Conditions January 9, 2009

XML Publisher Balance Sheet Vision Operations (USA) Feb-02

McGraw-Hill/Irwin 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.

Illinois Job Index. Growth Rate %

8.6% Unemployment Is a Myth

Historical Pricing PJM COMED, Around the Clock. Cal '15 Cal '16 Cal '17 Cal '18 Cal '19 Cal '20 Cal '21 Cal '22

Overview & Outlook for the P/C Insurance Industry: Focus on Illinois

Leading Economic Indicator Nebraska

C I T Y O F B O I S E

Today's jobs data: what you need to know

Leading Economic Indicator Nebraska

Leading Economic Indicator Nebraska

Nonfarm Payroll Employment

The California Economy Recession, Forecast, Budget, Issues

Robert D. Cruz, PhD, Chief Economist

U.S. Economic Update and Outlook. Laurel Graefe, REIN Director Federal Reserve Bank of Atlanta October 2, 2013

North American Steel Industry Recent Market Developments, Future Prospects and Key Challenges

2013 San Diego Economic Outlook. Marney Cox Chief Economist San Diego Association of Governments November 15, 2012

2017 ECONOMIC AND WORKFORCE PROFILE Washington County

Released: February 5, 2010

South Central Alabama Comprehensive Economic Development Strategy

Historical Pricing PJM PSEG, Around the Clock. Cal '15 Cal '16 Cal '17 Cal '18 Cal '19 Cal '20 Cal '21 Cal '22

Babson Capital/UNC Charlotte Economic Forecast March 11, 2014

Unemployment and the Labor Market

Economic Outlook. Deficit Reduction: Fiscal Drag or Addition through Subtraction? November 30, 2012

Leading Economic Indicator Nebraska

Trust Fund Loans: Interest Charges and Credit Reductions National Employment Law Project UI Conference December 5-6, 2011

CBER Economic Indexes for Nevada and Southern Nevada

C H A P T E R 1 T H E I L L I N O I S R E P O R T

2017 ECONOMIC AND WORKFORCE PROFILE Waukesha County

Maintaining Public Sector Funding Access: The Importance of Preserving Money Market Mutual Funds (MMFs)

5.9 Percent 4.4 Percent 10.2 Percent 9.7 Percent. autonomous federated state Head of Government Angela Merkel Horst Seehofer José Manuel Barroso 3,7%

City of El Segundo Office of the City Treasurer

The real change in private inventories added 0.22 percentage points to the second quarter GDP growth, after subtracting 0.65% in the first quarter.

The Transitioning Massachusetts Economy

Measuring Unemployment Some Key Terms

INTRODUCTION TO WIOA CORE PERFORMANCE INDICATORS: Measurement and Data Collection

ECONOMIC CURRENTS. Vol. 2, Issue 1 THE SOUTH FLORIDA ECONOMIC QUARTERLY. Introduction. In this Issue:

North American Steel Industry Recent Market Developments, Future Prospects and Key Challenges

Spheria Australian Smaller Companies Fund

The Economic Case for Unemployment Insurance and the Supplemental Nutrition Assistance Program

Economic Update. Air & Waste Management Association. Georgia Chapter. Michael Chriszt Federal Reserve Bank of Atlanta October 4, 2013

IT STARTS HERE. Daniel R. DiMicco, Executive Chairman Nucor Corporation October 16, 2013

What is Monetary Policy?

Was it all for N 0 u g h t? The 00 Decade and the Year Ahead. Tony Pierson Cornerstone Real Estate Advisers LLC. Real Estate Conference

Household Income Trends: February 2012

Macroeconomic Outlook: Implications for Agriculture. It has been 26 years since we have experienced a significant recession

GENERAL FUND REVENUE & ECONOMIC OUTLOOK. January 20, 2009 Fiscal Research Division Barry Boardman, Ph.D.

HUD NSP-1 Reporting Apr 2010 Grantee Report - New Mexico State Program

CBER Economic Indexes for Nevada and Southern Nevada

Employment Support in the UK: Key statistics briefing

Leading Economic Indicator Nebraska

Illinois Job Index Note: BLS revised its estimates for the number of jobs and seasonal adjustment method at the beginning of 2010.

Today's jobs data: what you need to know

Financial & Business Highlights For the Year Ended June 30, 2017

Today's jobs data: what you need to know

Today's jobs data: what you need to know

Business Cycle Index July 2010

Southwest Florida Regional Economic Indicators. March 2010

U.S. and Montana Economic Outlook

From Stability to Prosperity for All

October 2018 VOLUME XII NUMBER 10

How to Fix The Canadian Recession

Released: March 5, 2010

Employment Law Project. The Crisis of Long Term Unemployment and the Need for Bold Action to Sustain the Unemployed and Support the Recovery 1

Report for June 2009

April 2018 VOLUME XII NUMBER 4

QUARTERLY FINANCIAL REPORT December 31, 2017

Transcription:

Ins tute for Research on Labor and Employment Research & Policy Brief Number 13 May 213 California Crisis: The Ups and Downs of Recovery Where Have the Unemployed Workers Gone? Lauren D. Appelbaum, UCLA Ins tute for Research on Labor and Employment It has been nearly four years since the United States entered a recovery following the Great Recession of 27 29. While it is true that the na onal economy has been growing since July 29, what this growth means for the lives of working people around the country and in California is less clear. Certainly, recent job gains are a posi ve development, inspiring a greater degree of confidence among a discouraged labor force. But is it enough to offset the impact of a jobs crisis reaching historic propor ons? This brief will examine the employment situa on in the U.S. and California today and explore how years of slow job growth a er years of the worst recession since the great depression is affec ng the na on s labor force. Unemployment and Job Loss/Crea on in the United States and California It took almost 3 years from when unemployment peaked at 1% in October 29, but it finally happened unemployment dropped below 8% in September 212. Seven months later, in April 213, the unemployment rate fell to a post recession low of 7.5%. It took a li le longer for the situa on to begin improving in California, remaining at or above 12% for 18 months from September 29 through February 211. Since then, the state has witnessed a decrease in the unemployment rate by 3 percentage points, from 12% in February 211to 9% unemployment in April 213. 1 Figure 1. Unemployment rate in the United States and California since start of the Great Recession The UCLA Ins tute for Research on Labor and Employment supports faculty and graduate student research on employment and labor topics in a variety of academic disciplines. The Ins tute also sponsors colloquia, conferences and other public programming, is home to the undergraduate minor in Labor and Workplace Studies at UCLA, and carries out educa onal outreach on workplace issues to cons tuencies outside the university. The views expressed in this paper are not the views of The Regents of the University of California or any of its facili es, including UCLA, the UCLA College of Le ers and Science, and the IRLE, and represent the views of the authors only. University affilia ons of the authors are for iden fica on purposes only, and should not be construed as University endorsement or approval. Source: Bureau of Labor Sta s cs 1 Bureau of Labor Sta s cs. 1945 Le Conte Ave. Ste. 217 Los Angeles CA 995 Tel: (31) 794 5957 Fax: (31) 794 643 www.irle.ucla.edu

Furthermore, 4.9 million jobs have been created nationwide and over 6, jobs have been created in California since the recovery officially began in July 29. 2 Figure 2. Cumulative job loss/growth in the United States and California United States California 1 Job Loss/Growth (in thousands) 1 2 3 4 5 6 7 8 9 1 Dec 7 Mar 8 Jun 8 Sep 8 Dec 8 Mar 9 Jun 9 Sep 9 Dec 9 Mar 1 Jun 1 Sep 1 Dec 1 Mar 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Source: Bureau of Labor Statistics While this is all good news, it only tells part of the story. When the recovery began in July 29, 7.8 million jobs had been lost and an additional 1.9 million jobs that are usually created to account for monthly increases in the working age population had not been created. After the end of the recession, the country needed to recover not only the jobs lost and not created during the recession, but also create nearly 1, additional jobs each month to keep up with the continued growth of the working age population. That means, for the United States to have as many jobs in April 213 as it would have had without the recession, there should have been 14.2 million jobs created during the recovery thus far. As already noted, 4.9 million jobs or just over one-third of the jobs needed to bring the country back to trend have been created. Thus, if future growth in the working age population remains around 1, people per month and if job growth continues at its recent three-month (February through April 213) average of 212, net new jobs created each month, pre-recession employment levels will not be reached for nearly another 7 years or until the beginning of 22. 3 2 Bureau of Labor Statistics. 3 Bureau of Labor Statistics.

Figure 3. Jobs deficit in the U.S. since start of the Great Recession and number of months needed to return to trend Expected Job Growth without Recession Actual Job Loss/Growth since Recession Start 2 Number of Net Jobs Created or Lost Since Startt of Great Recession (in thousands) 15 1 5 5 1 Dec 7 Jul 8 Feb 9 Sep 9 Apr 1 Nov 1 Jan 12 Aug 12 Oct 13 May 14 Dec 14 Jul 15 Feb 16 Sep 16 Apr 17 Nov 17 Jun 18 Jan 19 Aug 19 Mar 2 April 213 9.3 million jobs deficit Source: Author s analysis of Bureau of Labor Statistics data Recovery and Underemployment Furthermore, some of this job growth has likely been due to more individuals working at part-time jobs. The number of workers who are working part-time for economic reasons peaked at 9.4 million in September 21. Yet, at 7.9 million people in April of 213, the number of involuntary part-time workers is still nearly double the 4.6 million workers who were working part-time for economic reasons in December 27, at the start of the recession (See Figure 4). 4 4 Bureau of Labor Statistics.

Figure 4. Involuntary part-time workers since December 27 1 9 8 7 6 5 4 3 2 1 Dec 7 Mar 8 Jun 8 Sep 8 Dec 8 Involuntary Part Time Workers (in thousands) Mar 9 Jun 9 Sep 9 Dec 9 Mar 1 Jun 1 Sep 1 Dec 1 Mar 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Source: Bureau of Labor Statistics Given such slow job growth, why then are we seeing continued improvement in the unemployment rate? Of course, some people are finding jobs. However, a troubling reason for the consistent drop in unemployment is that millions of workers have simply disappeared from the labor force. Given the aforementioned increase in the working age population of about 1, people per month, the labor force should have increased by 6.5 million people since the Great Recession began in December 27. However, it only rose by 1.3 million people, 5 resulting in a 5.2 million person gap. As people leave the labor force, the proportion of people in the labor force looking for jobs relative to the total number of people in the labor force will decrease. Unfortunately, a reduction in the unemployment rate due to disappearing workers does not point to improvement in the labor market. Recovery and Long-Term Unemployment Long-term unemployment peaked in March 211 with 45.3% of the unemployed remaining out of work for 6 months or more. In April 213, the long-term unemployed had dropped to 37.4% of all unemployed people and the average length of unemployment had fallen from a peak of 4.7 weeks (November 211) to 36.5 weeks. 6 Despite this recent decrease in the duration of unemployment, longterm unemployment remains at historic highs. While the number of unemployed people who have been 5 Bureau of Labor Statistics. 6 Bureau of Labor Statistics.

out of work 6 months or more has dropped from a high of 6.7 million in April 21, at 4.4 million people in April 213, this figure remains at more than 3 times its prerecession level. Furthermore, it is likely that some of the decrease in long-term unemployment is due to changes in the length of time that people receive unemployment insurance. While individuals are receiving unemployment benefits they must continue searching for work. Once those benefits end, some people become discouraged and give up their search. Thus, the recent decrease in the duration of unemployment may be associated with a reduction in the number of weeks unemployment insurance benefits are available as long-term unemployed workers leave the labor force rather than find a job. 7 Figure 5. Number and percent of the unemployed who are out of work for six months or more Number of LTU Number of Long Term Unemployed (in thousands) 8 7 6 5 4 3 2 1 Percentage of Unemployed who are LTU 5 45 4 35 3 25 2 15 1 5 Dec 7 Mar 8 Jun 8 Sep 8 Dec 8 Mar 9 Jun 9 Sep 9 Dec 9 Mar 1 Jun 1 Sep 1 Dec 1 Mar 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Percent Source: Bureau of Labor Statistics Conclusion The job growth experienced over the past 2.5 years or so has been a positive turn in both the country and in California. However, unlike the good jobs that were lost during the recession, the jobs created during the recovery are in industries that are more likely to pay low-wages, have high turnover, 7 Baker, D. (213, May 3). Economy Adds 165, Jobs in April, Unemployment Drops to 7.5 Percent. Jobs Byte, Washington, DC: Center for Economic and Policy Research. http://www.cepr.net/index.php/data bytes/jobsbytes/jobs 213 5. (accessed May 1, 213)

limited benefits, and little opportunity for career advancement. 8 Furthermore, at the current rate of job creation, it will take almost 7 years to reach pre-recession employment levels. Additionally, there is no guarantee that job growth will continue. An April 213 NELP report notes that if cuts due to austerity policies and sequestration are allowed to persist, GDP growth will slow and as many as 2.4 million jobs could be lost. 9 Moreover, nearly 22 million people are still unemployed, underemployed, or marginally attached to the labor force (having given up searching for a job, but available and willing to take one should a job become available). Not only do these people and their families continue to suffer economically, physically, and mentally, 1 but the economy continues to suffer. It is difficult to grow a consumer economy without consumers with disposable income. We need to create jobs, not cut back. The American public agrees. A 211 national survey found support for putting the recovery and unemployment reduction at the top of the country s policy priorities. 11 It is clear that job creation policies must be implemented. Austerity policies have been discredited by the disastrous effect such policies have had on the UK and other European economies. Not only has unemployment increased, but the debt-to-gdp ratio has risen and austerity has had a negative impact on GDP. Spending cuts have led to slower growth in GDP, making it more difficult not less to manage debt. The theoretical justification for austerity has likewise been undermined by the discrediting of Reinhart and Rogoff s argument for limiting the debt ratio. In view of continuing high unemployment in the U.S. and no sign of inflation, there is no excuse for austerity now. It is great that the U.S. will soon be entering its fourth year of recovery from the recession. But if we want the economy to truly be healthy, we need to recover from the jobs crisis by bringing back those workers who have disappeared and reconnecting them to decent jobs and to our economic community. 8 Research conducted by the National Employment Law Project found that 6% of the jobs lost during the recession were in mid wage occupations. Evangelist, M., & Christman, A. (213, April). Scarring Effects: Demographics of the Long Term Unemployed and the Danger of Ignoring the Jobs Deficit. Briefing Paper, New York: National Employment Law Project. http://nelp.3cdn.net/4821589f87f6c52e1_nem6bxjt.pdf. (accessed May 1, 213) 9 Evangelist, M., & Christman, A. (213, April). Scarring Effects: Demographics of the Long Term Unemployed and the Danger of Ignoring the Jobs Deficit. Briefing Paper, New York: National Employment Law Project. http://nelp.3cdn.net/4821589f87f6c52e1_nem6bxjt.pdf. (accessed May 1, 213) 1 Diette, T. M., Goldsmith, A. H., Hamilton, D., & Darity, W. Jr. (212). Causality in the relationship between mental health and unemployment. In L. D. Appelbaum (Ed.). Reconnecting to Work: Policies to Mitigate Long Term Unemployment and Its Consequences. (pp. 63 93). Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. Von Wachter, T. (212). Job displacements in recessions: An overview of long term consequences and policy options. In L. D. Appelbaum (Ed.). Reconnecting to Work: Policies to Mitigate Long Term Unemployment and Its Consequences. (pp. 17 35). Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. 11 Van Horn, C. E. (213). Working Scared (Or Not at All): The Lost Decade, Great Recession, and Restoring the Shattered American Dream. Plymouth, UK: Rowman & Littlefield Publishers, Inc.