I don’t usually write about macro things. But a journalist asked me about the duration of unemployment, and I checked out how this recession compares to previous ones. I looked at the percentage of the unemployed who have been out more than 26 weeks in past recessions: July 2009, 34 percent; July 2003, 22 percent; July 1992, 22 percent; and even in the very deep and long 1980 to 1982 double-recession it was 25 percent in July 1983. “So what?” you might ask, since the unemployment rate this time is not likely to reach the 10.8 percent of late 1982.
The answer is that the welfare effect of unemployment depends on its duration. Society is worse off at 10 percent unemployment if that figure is concentrated on a small number of long-term unemployed than if it’s spread more evenly across the labor force. A few weeks of unemployment don’t exhaust savings and don’t lead to great depreciation of skills. A year of unemployment can do both.
By this important criterion, this recession has had the biggest negative impact since the Great Depression.
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The problem is that too many people in our economy have been employed in completely non-productive activities due to the rising tide of the housing boom. These people had high incomes and believed themselves to be in skilled positions and because of such they are resistant to take a lower quality “unskilled” job. Unfortunately these people have been rendered structurally unemployed, the market no longer demands the skills they have. The key to solving this problem is investment in education and re-training. The “service” oriented economy is only sustainable when people are taking money out of their houses to blow on luxury items. In the long term our country needs to get back to actually making/creating things.
And the “true” unemployment rate is much greater than 9.4%. I know several people who have given up looking for work at this time, and as we know, those people aren’t counted among the unemployed in this Orwellian world. The true unemployment/underemployment figure is closer to 20%.
True unemployment is closer to 20%. We are broke, nobody wants our dollars for goods, and we are obese and lazy. We are in some serious you know what. It doesn’t help that our populace is ignorant as made evident by the number of votes that Ron Paul got.
Can’t this almost directly be linked to the recent extensions available for unemployment? A friend of mine filed in Dec 2008 and was told he was eligible for 26 weeks. At this point in time, if he files extensions, he’s eligible for 66 weeks. Anybody know what the limits were in previous recessions?
If the allowed time on UE wasn’t extended previously, I don’t think we can say anything significant about this recession based on this evidence.
Oh yeah, and my friend? At the 6 month point he essentially gave up; now he’s just collecting cash and traveling as much as he wants. Funemployment is how we describe what he’s doing — and it really pisses me off!
And yet the “stimulus” jobs are heavily in government jobs, which produce much less of value than the manufacturing jobs lost.
“Oh yeah, and my friend? At the 6 month point he essentially gave up; now he’s just collecting cash and traveling as much as he wants.”
I don’t see how people do that. When I applied for unemployment a few years back, I was required to prove I was actively looking for work. Maybe my case worker was just more diligent than most, I don’t know.
When times are good unemployment is 5% or less. So now times are bad and unemployment is rougely 10%.
I think that people seem to forget this- they concenetrate on the 10% figure and not on the fact that in reality there is another 5% of the work force that is unemployed than during the good times.
In numbers
- in good times 5 people out of 100 are unemployed.
-in bad times an additional 5 people out of 100 are unemployed
This means that in bad times 90% of people are employed.
since the great depression, since the great depression, since the great depression…
aren’t we glad that cd recordings or mp3s don’t skip and repeat like LPs did back then.
remind me again how middle aged women were counted in employment figures in the great depression and in the early eighties and now.
Because as a lifelong housewife in the 21st century, I know how i figure into the work numbers and money.
And i have made and created clothing, dinner, artwork my whole life long, not just cleaning services.