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The jobs recovery: Eight years post Great Recession

Sylvia Allegretto, Economist, Co-Chair of the Center on Wage and Employment Dynamics | May 17, 2016

In December 2007 the economy was on the precipice of the Great Recession. The severity and swiftness of job losses was extraordinary. As losses mounted I wrote a post in 2011, remarking at the time that it was impossible to imagine how long it would take to regain all the jobs that vanished. Well, we now have the answer — the destruction and recovery took well over six years.

Job growth is depicted in Chart 1. Each line represents a recession and starts at the onset of recession and traces monthly job growth. I’ve included trends for the last three recessions; the current trajectory for the U.S. and California and the previous two recessions for California.

JOBS 2016

Evident from the chart — the shedding of jobs over the Great Recession was rapid and deep — particularly in California, as the climb out for both the U.S. (dotted red line) and California (red line) took much longer. From the beginning of the downturn through its trough, job losses in the U.S. totaled about 8.7 million or 6.3% of all jobs; 15% of those were in California, which represented job losses of 1.3 million or 8.3% in the state. This shedding of U.S. jobs was historical given that a total of 3.1% of all jobs were lost in the severe early-1980s double-dip recessions (not shown)–and as compared to the 1990 (blue line) and 2001 (green line) recessions in the Golden State.

The good news is that beginning in October 2010, the U.S. has experienced 65 consecutive months of job gains with a monthly average of 203,000. Consistent positive gains in California started in July 2011 and continued until a blip in January 2016 when a loss of 4,000 was logged—monthly gains have averaged just fewer than 35,000 in the state. As Chart 1 indicates, job growth in California, on a percentage basis, has outpaced gains for the U.S. over the past few years.

As of February 2016, total job growth was up 3.7% (5.1 million) in the U.S. and 5.4% (838,000) in California compared to December 2007. However, it should be noted that the 3.7% and 5.4% job growth figures for the U.S. and California, respectively, have happened over an eight-year period—which is weak in the context of a growing labor force.

To find out more about labor market trends post-Great-Recession for the U.S. and California see my newly released CWED issue brief (pdf). In this brief I contextualize many economic indicators (job growth by sector, unemployment, long-term unemployment, EPOPs, wages, and incomes) as the economy enters its ninth year since the onset of the Great Recession and approaches the seventh year of official recovery (June 2016).

Comments to “The jobs recovery: Eight years post Great Recession

  1. A better measure of employment is the Labor-Force Participation Rate, which has fallen consistently over the past 8 years as an increasing percentage of those out of work and looking for work simply give up and quit looking:

    U.S.: 62.9%
    California: 62%

    The situation now is worse than at the end of the Carter Presidency. See stats here.

  2. To Alex B and Petey Barnum:

    The key point made in by Michele Nash-Hoff and by Representative Hunter (R-CA) is that the
    California BUSINESS CLIMATE is in the tank. This point is reinforced by 2016 Best & Worst States For Business in Chief Executive Magazine that rates California at the very bottom.

    BTW, you may not be aware, tax revenues support public education. So when business and jobs leave California for friendlier environments tax revenues for public education fall.

  3. Manufacturing leaders have complained that California’s stringent environmental and workplace regulations, its costs of workers’ compensation insurance, its utility rates and its tax structure discourage industrial expansion in the state.

    “California lost 33.3% of its manufacturing industry, representing more than 600,000 manufacturing jobs between 2000–2010, some to other countries and states. California is improving, but is lagging behind the rest of the U. S. in growth of the industry jobs (2% vs. 7.6 %. Since the end of the recession, manufacturing’s share of California’s GDP has been 11.2%, compared to 22.6% for the U. S. as a whole. California has remained at the ranking of 50th for its business climate by the Small Business Entrepreneur Council Survival Index since 2013.” (See source.)

    Representative Hunter (R-CA) has it right when he says that California is on the leading edge of stupid. (see this Fox Business video.)

    • Choosing 2000-10 for the 33-percent stat is telling. See the graph in the original article. 2010 is year three in that graph (the bottom of the curve for the ’07-09 recession.)

      California is really doing fairly well in terms of job numbers compared to other states in this recession – note how it crossed back above zero before the U.S. as a whole, and has rebounded faster, with higher percentage gains since the start of the recession. As for manufacturing specifically, that’s a nationwide trend with global root causes.

      And as for the “leading edge of stupid,” Kansas may have edged us out there. They bent over backwards to be business friendly (massive tax cuts funded by slashing social services), undoubtedly making the small business entrepreneur council happy, but ended up with a massive budget hole, and none of the economic growth and “Laffer curve” tax revenue promised.

    • Well, what with purchases at Disneyland and his son’s Steam Games account on his campaign credit card, Rep. Hunter ought to know something about the leading edge of stupid.

      But I find it hard to find fault with California’s economic performance. Manufacturing is a terrible sector to focus on if you’re interested in producing jobs; the U.S. has higher manufacturing output than ever before, but very little employment in the sector.

      The robots took the jobs, and they aren’t giving them back. California’s massive growth in high-tech industries looks awfully good for the future by comparison.

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