U.S. Experiencing Worst Episode of Prolonged Unemployment Since Great Depression

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Center for Economic and Policy Research (CEPR)

U.S. Experiencing Worst Episode of Prolonged Unemployment Since Great Depression

Adjusting for demographic factors, current labor market downturn steeper than '82-'83 recession.

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Washington, D.C. - As the nation contends with a long and
sustained labor market recession, a new study from the Center for Economic and Policy Research
demonstrates that the current unemployment rate is higher than the
conventional measure shows.

"An unemployment rate that has hovered
above 9 percent for several months is striking, but the jobs picture is
even worse than it looks," said report author and CEPR Economist David Rosnick.

The study, "The Adult Recession: Age-Adjusted Unemployment at
Post-War Highs
," adjusts the current unemployment rate to account
for demographic differences and finds that the unemployment rate has not
fallen below 10.8 percent in the last 12 months. During the worst
episode of the recession of the 1980s -- the second half of 1982 and the
first half of 1983 -- unemployment passed 10 percent for 7 months.

The analysis notes that the population
is older today than it was in the 1980s, which has the effect of
lowering today's unemployment rate relative to the past. Since they
change jobs more frequently and are more likely to move in and out of
the labor market, Young people have a higher unemployment rate than
older workers. Adjusting for this older workforce shows that the United
States is experiencing the weakest labor market since the Great
Depression.

The severity of the current unemployment
situation suggests that policy makers should consider measures that
would slow or reverse this trend. Additional stimulus such as work
sharing or the extension of unemployment benefits by Congress would go
far in addressing the plight of the millions of unemployed Americans
suffering as a result of this downturn.

The full analysis can be found here.

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