January 31, 2008

Short-Term Recession = Long-Term Jobs Problem

Posted at 11:02 AM by John Quinterno

Over the past few weeks, the nation's economic pundits have gone from saying that the U.S. likely would avoid a recession to saying that that the U.S. likely will enter a recession to saying that the U.S. likely is in a recession but that it will be a brief one. Overlooked is the fact that even a short recession can have long-lasting effects on the labor market.

A new study prepared by the Center for Economic and Policy Research argues that a recession's negative impacts on employment, wages, incomes and poverty will last much longer than the recession itself. Based on an analysis of past downturns, the study's authors estimate that a mild recession will last between six and nine months with the labor market impacts reverberating until 2010.

The authors further forecast that a mild recession will raise the national unemployment rate, reduce the share of people with jobs, drive down family incomes, increase the number of poor households and further reduce the share of the population with health insurance coverage.  

Those patterns are consistent with national and state-level developments that  unfolded following the last three recessions (1980-82, 1900-91 and 2001). After the 2001 downturn, for instance, it took until 2006 for private-sector employment in North Carolina to return to its pre-recessionary level. And during that same period, according to the NC Budget & Tax Center , the share of Tar Heels with jobs fell while wages and incomes stagnated.

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3 Comments

3 Comments Add yours »

aplum 31 Jan 2008 11:51 am

Recessions hurt the poor and socially marginalized populations to an even larger degree.

According to the Economic Policy Institute

“The 2001 recession pushed the white annual unemployment rate up from a low of 3.5% in 2000 to a high of 5.2% in 2003. During the same period, the black unemployment rate shot up from 7.6% to 10.8%. National recessions take African Americans from a bad situation to a worse one.

We can expect to see a similar trend in this recession.

Goldman Sachs estimates that a new recession would increase the national unemployment rate to 6.4% by 2009. For African Americans, the unemployment rate would be expected to rise to 11.0%. When white America is in recession, black America is in an economic depression.

Women also are harder hit by economic downturns. A report released this week by the National Women’s Law Center found that while women experience the same rising levels of unemployment, they are less likely to qualify for unemployment benefits. Women’s lower incomes mean rising energy and food costs consume a larger portion of their family budget.

Any ecomonic stimulus package that the government puts together need to include extended unemployment benefits and food assistance.

Short-Term Recession = Long-Term Jobs Problem | Health Insurance Coverage 31 Jan 2008 1:13 pm

[...] Original post by The Progressive Pulse Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. [...]

The Progressive Pulse – A Disconnected World 9 Jul 2008 12:44 pm

[...] in the financial markets lasting well into 2009, while other analysts have estimated that the labor market impacts will stretch into 2010 or 2011. Put differently, there is much more pain to come, especially for working [...]

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