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Jobs ‘fell off a cliff’ – Report says slump is the worst in 80 years

Date Posted: July 17 2009

WASHINGTON (PAI) – Now it’s official, as far as the labor-backed Economic Policy Institute is concerned: The current U.S. economic slump “has become the longest and deepest economic downturn since the Great Depression.”

EPI director Larry Mishel and co-author Heidi Shierholz said in an analysis last month that as of May, the recession was in its 16th month, and June’s numbers made it 17. 

“This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle, a testament both to the enormity of the current crisis and to the extreme weakness of jobs growth over the business cycle from 2000 to 2007,” the researchers wrote.

Some key findings by Mishel and Shierholz:

    * Unemployment “increased much more rapidly during this recession than in other post-war recessions.  The unemployment rate increased 4 percentage points in the first 16 months of the current recession, a far steeper increase than any of the previous recessions.  In particular, during the first 16 months of the deep recession of 1981-1982, the unemployment rate increased only 3.2 percentage points.”

    * The number of workers gainfully employed went down in this recession far more than it did in the prior 50 years.  “Total non-farm employment...decreased much more during this recession –  4.2% –  than in prior recessions.  In particular, during the first 15 months of the recession of 1981-1982, employment declined by only 2.9%.”  Employment “fell off a cliff” in the last eight months of the current crash.

    * “While the labor market shed 5.7 million jobs since the start of this recession in December 2007, in those 16 months, the population continued to grow.  Just to keep up with growth, the economy must add approximately 127,000 jobs every month.  Two million jobs should have been added over this period.  In other words, the economy is now almost 8 million jobs below what is needed to maintain pre-recession employment levels.”

    * “Underemployment is a more comprehensive measure of labor market slack that includes not just the unemployed, but also ‘involuntarily’ part-time workers and marginally attached workers (jobless workers who want a job but are not actively seeking work and are not counted as officially unemployed). 

The number of involuntarily part-time workers has nearly doubled since the start of this recession, from 4.6 million to 9 million. The underemployment rate increased from 8.7% to 15.8%, so that now 24.8 million people – one of every six workers – are either unemployed or underemployed.”