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U.S. Experiencing Worst Episode of Prolonged Unemployment Since Great Depression
Adjusting for demographic factors, current labor market downturn steeper than '82-'83 recession.
WASHINGTON - July 1 - 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.