Category Archives: duration of unemployment

14/4/21: The share of those in unemployment > 27 weeks is rising

One way to look at the state of the real (as opposed to financialized and corporate-value focused) economy is to look at unemployment. And one of the strongest indicators of longer term changes in the structure of the real economy is the fate of the longer term unemployed. Here is an interesting snapshot of data: the percentage of those unemployed for 27 week or longer in the total pool of the unemployed. The higher the number, the more structural is the unemployment problem.

If the above is not clear enough, here is the same data expressed in the form of the range for each 12 months period (rolling) between maximum share of the longer term unemployed in the overall pool of unemployment and the minimum share:

All of the above suggests we are in deep trouble. And this trouble has been persistent since the Great Recession: we are witnessing a dramatic increase in the duration of unemployment spells. Part of this is due to the impact of Covid19 pandemic concentrated in specific sectors. Part of this is down to the generosity of unemployment benefits supplements and direct subsidies during the pandemic. Part of it is also down to the longer term changes in the U.S. labor markets and changes in households' composition and investment/consumption patterns.

Irrespective of the causes, the problem is obvious: the longer the person remains unemployed, the sharper is the depreciation of skills and their employability. If this (post-2008) experience is the 'new normal', America is developing a massive class of disillusioned and human capital poor workers.

3/5/20: Updated: The Scariest Chart in Economics

Updating one of the two 'Scariest Charts' in economics with the latest data - preliminary, through April 25, 2020:

This goes hand-in-hand with the earlier chart here: https://trueeconomics.blogspot.com/2020/05/3520-updated-shocking-wave-of-jobs.html.

The speed and the depth of jobs destruction in the U.S. during the last two months has been beyond precedent.

23/4/20: U.S. Labor Force Participation Rate Heading into COVID19 Disaster

Adding to the two scariest charts in economic history (see https://trueeconomics.blogspot.com/2020/04/1942020-two-scariest-charts-in-economic.html), a third chart, showing changes in the U.S. labor force participation rates during and following recessions:

The above clearly shows that 2008-2009 recession has been unique in the history of the U.S. economy not only in terms of the unprecedented duration of unemployment (link above), but also in terms of the scale of exits from the labor force. In fact, this was the first recession on record that resulted in post-recession recovery not reaching pre-recession high in terms of labor force participation rates.

19/4/2020: Two Scariest Charts in Economic History

I have been posting quite a bit on U.S. unemployment and jobs destruction numbers coming from the COVID-19 pandemic. So here are two charts to watch into the future, and I will be updating these throughout the crisis here.

The first chart plots evolution of non-farm payrolls index for each official recession. I used as the index base average payroll numbers for 6 months prior to the first month of the recession. I then compute and plot the index from month 1 of the recession through the last month prior to the next recession.

The second chart is the average duration of unemployment claims or average weeks unemployed. Again, series start from the first month of officially-declared recession and run until the subsequent recession.

Both charts illustrate the contradictory nature of the post-2008-2009 recession recovery. Whilst the recovery has been the longest in duration (chart 1 above), it has not been the most dramatic in terms of employment creation relative to prior pre-recession peak (line "2008-2009" solid segment runs longer than any other line, but does not gain heights of at least 6 prior recoveries. Per chart 2 above, recovery from 2008-2009 recession has been associated with unprecedented length of duration of unemployment. The series here stop at the end of February 2020, so they do not account for the recent jobs losses, simply because there has not been, yet, official announcement of a recession.

You can read on March-April jobs losses here: https://trueeconomics.blogspot.com/2020/04/16420-four-weeks-of-true-unemployment.html and in the context of prior recessions here: https://trueeconomics.blogspot.com/2020/04/18420-shocking-wave-of-jobs-destruction.html.

Stay tuned, as I will be updating these two charts as data arrives.

3/6/19: Average Duration of Unemployment in the U.S.: Still High by Historical Comparatives

Remember my 'scary chart' from the day back? The one plotting the persistently high - relative to the business cycle - duration of unemployment in the U.S.?

I have not updated this chart for some years now. So here is a new version based on the latest data:

Two things worth noting:

Declines in unemployment and rises in employment in recent years have been accompanied by a rather dramatic decline in the average duration of unemployment claims in the U.S. This is reflect in the drop in the cyclically-adjusted average duration of claims evidenced in the chart.
However, by all historical comparatives, the current business expansion cycle continues to be associated with significantly higher average duration of unemployment, compared to the pre-recession average.

In other words, not all is rosy in the labor markets.