My recession worse than your recession? Maybe not
I made a pretty good case last year that the early 1980s recession (mine) was worse than the current downturn, but pulled back on that a couple weeks ago when the official word came that this recession is longer than the '80s.
Today, I retreat again.
Newly released research from the Minnesota Department of Employment and Economic Development has me convinced that while the state's jobless rate was bad in the early '80s, the overall labor picture in the Great Recession is worse.
Comparing key labor market indicators from the '80s and today, the report concludes, "today's job market, while on the rebound, is weaker than the job market rebound 30 years ago.The labor force expanded faster 30 years ago as stronger job growth drew workers into the labor force."
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The reports graphics tell the tale (click on each to get a larger view). The unemployment rate was worse in the last Great Recession:
But the larger labor market conditions bottomed out and bounced back much faster then than today:
And there's no doubt it's been worse the past two years when it comes to initial unemployment claims. "Initial claims doubled during the Great Recession and are still 25 percent higher than pre-recession levels," the report says.
The spike in initial claims three decades ago was smaller, occurred quicker, and faded faster. A higher rate of hiring and a lower rate of layoffs in the 1981-82 recession produced a more robust job recovery than today.
The graph showing the current drop off in the labor force has me particularly vexed.
At MinnEcon, we've reported on the sharp, sudden drop in the state's labor force since April.
Why isn't the improving economy bringing discouraged workers back into the labor force the way experts expected? That's the way it's supposed to work -- things get better and all those folks who gave up start trying again.
We can't answer that yet. But it's worrisome.
Not only has the labor market here been worse than in the early 1980s (I now concede), but the "recovery" is not following the paths we've come to expect coming out of recessions.
To paraphrase the mutual fund industry, past performance is no longer a predictor of future success. Scary.
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