1. The Economy Today: U.S. Labor Market
Keith Hall
Senior Research Fellow
Mercatus Center, George Mason University
September 27, 2012

2. Why it's called the "Great Recession"
Job Loss by Recession (millions)
6
4
1980/81 Recessions
2 1973 Recession
1990 Recession 2001 Recession
0
0 1 2 3 4 5
-2
-4 2007 Recession
- 8.5 million
-6
-8
-10
Years Since Start of Recession
-12
1

3. Cost of Recession: Lost National Income
(GDP vs Potential GDP, trillions of 2012$)
$18
$16 $3.7 Trillion in Lost National Income
$14
$12
$10
$8
$6
$4
$2
$0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
2

4. Cost of Recession: Lost Household Wealth
(trillions of 2012$)
$60
$50 Lost Financial Net Worth: $5.5
$40
$30
$20 Lost Homeowner Equity: $8.0
$10
$0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
-$10
Government Balance Sheet Loss: $5.8
-$20
3

5. Economic Cost of Recession:
Lost Income and Lost Wealth
Lost Household Financial Net Worth: $5.5 trillion
+ Lost Homeowner Housing Equity: $8.0 trillion
+ Growth of Government Debt: $5.8 trillion
Total Lost Wealth: $19.3 trillion
+
Lost National Income: $3.7 trillion
Total Economic Cost of Recession: $23.0 trillion
(150% of GDP)
4

6. Unemployment Rate is Misleading
(% of labor force)
12
12.5 million Unemployed (8.1%)
10
8
6
4
5.3 million Long Term Unemployed
2
0
1960 1975 1990 2005
5

7. Biggest Disengagement
from Labor Force Ever
(% of population)
68
66
64
Decline equal to 6.2 million (2.5%)
62
60
58
56
1960 1975 1990 2005
6

8. Labor Force by Age
(percent of population)
90 25 to 54 year olds (-1.5%)
80
70 20 to 24 year olds (-3.5%)
60
Teenagers (-7.0%)
50
40
55+ year olds (+1.6%)
30
20
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
7

9. Best Current Labor Market Indicator:
Employment Ratio
(% of population)
66
64
62
60
58 Decline equal to
11.3 million (4.6%)
56
54
1960 1975 1990 2005
8

10. Weakest Economic Recovery Ever
(annual GDP growth by recovery)
9
8 7.8
7
6 5.8 5.8 Current
5.2 Recovery
5 4.5
4.2
4.0
4
3.2
2.9
3
2.4 2.2
2
1
0
1948 1953 1957 1960 1969 1973 1980 1981 1990 2001 2007
9

11. How to read Employment Situation Release
• BLS summary in first paragraph of release
• Total Nonfarm Payroll Jobs (Summary Table B)
• Unemployment Rate (Summary Table A)
• Employment to Population Ratio (Summary Table A)
• Employment by Selected Industry (Summary Table B)
• Average Weekly Hours in Manufacturing (Table B-2)
• Alternate Measures of Labor Underutilization (Table A-15)
• Data from two different surveys
• Payroll Survey (companies) – employment records of
40 million people, has industry detail
• Household Survey – phone calls to 60,000 homes, has
demographic and other labor market info
10