The document provides an analysis of the U.S. labor market during the 'Great Recession,' highlighting the severe job losses and economic costs associated with the recession, amounting to a total economic cost of $23 trillion. It notes an unprecedented disengagement from the labor force and presents statistics regarding unemployment and changes in labor force demographics. Additionally, the document outlines indicators for assessing the employment situation and compares the current recovery to previous ones, indicating a remarkably weak economic recovery.

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