1. Unemployment Before, During, and After the Great Recession Dr. Norm Cloutier, Director UW-Parkside Center for Economic Education 23 rd Annual ASET Meeting Milwaukee, WI December 7, 2012

2. Measuring Labor Market Performance Household Survey – Current Population Survey of 60,000 hh regarding labor market behavior in the “reference week.” Establishment Survey – Current Employment Statistics (CES) surveys 141,000 businesses and government agencies, 486,000 individual worksites.

3. Categorizing Labor Market Behavior In the Labor Force (civilian, noninstitutionalized, ≥ 16 years-of-age) – Employed: Worked in reference week. – Unemployed: Did not work in reference week, actively sought employment in last 4 weeks, and was available to work. Not in the Labor Force: Did not work, did not look for work in the reference week, or was unable to work. – Marginally Attached: Want a job, looked in the last 12 months (but not last 4 weeks), are available. Discouraged Workers: Not looking because of economic conditions.

4. Headline Unemployment: U3 Oct 2012 7.9% Oct 2009 10.1% Percentage

5. Labor Force Participation Rate Oct 2012 63.6% Apr 2001 67.3% Percentage

6. The Amazing Disappearing Worker Decades-long decline in male 25-54 LFP – 1970: 96.0% 2012: 88.5% Aging Boomers: “The Pig in the Python” – We may soon reach 10,000 new retirees per day Recession: – Discouraged Workers – Premature retirement Public policy: – Relaxed standards for disability

7. Male and Female Labor Force Participation: 1948-2011 Percentage

8. LFP rate of prime working age population peaked in 2000 Oct 2012 81.5% % in the labor force

9. LFP Rate of ≥ 65 has been increasing since 1985 Oct 2012 18.4% % in the labor force

10. … but there are soooo many more of them: the “pig in the python” is aging Past 12 months averaged 6,500 new “seniors” per day Thousands

11. Increasing share of working age population is disabled Oct 2012 5.4%

12. Alternative Measures of Unemployment: U5 and U6 Oct `12 9.3% Oct `12 14.6% Percentage

13. Causes of Unemployment? Traditional Categories: – Seasonal, Frictional, Structural, Cyclical Demand-side: – Insufficient aggregate demand “balance sheet” recession risk averse financial institutions Supply-side – Public policy: unemployment insurance, food stamps, Medicaid, taxes, regulation, – “Uncertainty”

14. The “Chart of Doom”: Job Loss as Percentage of Total Employment Peak Job Trough Feb 2010 8.76 mil jobs lost Lost > 500,000 jobs/month, Oct `08 – Apr `09 28 ― 1981 ― 1990 ― 2001 ― 2007 cumulative % change in total employment 48 32

15. Job Loss as Percentage of Total Employment Peak 2007 cumulative % change in total employment March 2010

16. Government Jobs During Employment Contraction 1981 2007 2001 months since employment peak cumulative % change in government employment 1990

17. Government Jobs During Employment Expansion cumulative % change in government employment since trough 1981 1990 2001 2007

18. Private vs. Government Jobs During Employment Expansion: 2001 vs. 2007 Recessions cumulative % change in employment since trough 2001 Private 2001 Public 2007 Private 2007 Public

19. Construction 4%Manufacturing 9%Transport & Warehouse 3% ??? 11%Leisure 10% FIRE 6%W&R Trade 15%Prof & Bus Serv 13% Government 16%Local Public Education 6% Job growth by selected industries during contraction—expansion phases of the 2007 recession *%= industry’s percentage of overall employment

20. Since March 2009 initial unemployment claims have been declining

21. … the average length of unemployment seems to have stabilized Weeks

22. Unemployed ≥ 27 weeks as % of total unemployed Percentage

23. Improving conditions for job seekers?: unemployed, job openings, and quits 2.9* 1.1* 6.7* 1.4* 3.4* thousands Date *ratio unemployed to openings