Unemployment: The Perspective of a Decade

It has been almost a decade since the deepest economic crisis the world has seen the Great Depression of the 1930s.

The pain was not equally felt everywhere. For Greece, for example, the hardship in the form of economic contraction and spiking unemployment really did reach Great Depression levels.

It was not nearly so bad in the United States. Still, the modest U-3 measure of unemployment did hit 10 percent (in October 2009), stayed above 9 percent for two and a half years (30 months), above 8 percent for close to four years (43 months), above 7 percent for almost five years (59 months) and above 6 percent for six solid years (73 months).

More inclusive measures present an even worse picture, the U-6 (which counts those who want full-time work but are stuck working part-time, for example) at or even above 17 percent for five months, and at or above 10 percent for over seven years (88 months)--while it should be remembered that even the U-6 has been charged with undercounting unemployment in general and the post-2008 spike in unemployment specifically, entirely overlooking millions of "displaced workers."

Today the U-3 is at a near-record low of below 4 percent (3.9), the U-6 well under 8 percent (7.5) as of this past July, while major news outlets crow that job openings now outnumber the jobless. This implies boom times.

Still, the low unemployment numbers overlook the reality of lower work force participation pretty much across the board demographically speaking, as does one of the seemingly brighter reasons for it (more people in school--in school because they have to be in an age of credentialing crisis).

The movement of wages tells a similar story about the relationship between supply and demand in the labor market. In 2008 the median hourly wage was $15.57. Last year the median hourly wage was reported as $18.12. If one adjusts the figure for inflation using the Consumer Price Index, then wages have risen a mere 4 percent in the past decade. If one regards the CPI as understating inflation (do you really feel that prices went up just 12 percent in all that time?) then real earnings may well be below their pre-crisis levels. If one expects them to have some relationship to GDP growth (about 10 percent after inflation when calculated in the same way, roughly Great Depression-era rates, but there it is all the same) then by this measure workers have lost ground.1

Some recovery, that.

1. For the purposes of this calculation I used the Bureau of Economic Analysis' figures on U.S. GDP for 2008 and the second quarter of 2017 ($14.7 trillion and $19.4 trillion), and the commonly reported population figures of 304 and 325 million, for the two points.