Sunday, February 19, 2012

Random chart - unemployment context

Source: CBO: Understanding and Responding to Persistently High Unemployment

Where we are:
  • The unemployment rate reached a very high level, peaking at 10.0 percent in October 2009. That rate has been topped in the post–World War II period only once before—during the severe 1981–1982 recession. From the end of2007 to October 2009, the number of unemployed people rose by almost 8 million.
  • Unemployment has been high for an extended period. As of January 2012, the unemployment rate had been above 8 percent for 36 months and at or above 9 percent for 28 of the preceding 36 months. In contrast, the unemployment rate exceeded 8 percent for 26 months and was at or above 9 percent for 19 months during the recession of the early 1980s.
  • Many people would like to work but have not searched for a job in the past four weeks, or are working part-time but would prefer full-time work. If those people were counted among the unemployed, the unemployment rate in January 2012 would have been about 15 percent.
  • The share of unemployment accounted for by the long-term unemployed (people who have been seeking work for more than 26 weeks) has been at an all-time high. Over 40 percent of people who are currently unemployed have been out of work for more than half a year, as compared with about one-quarter during the 1981–1982 recession.
And the factors that caused the unemployment rate to increase from five percent in December 2007 to 8.5 percent in December 2011 - a three and a half percent increase:

  • Weak demand for goods and services as a result of the recession and its aftermath, which accounts for about two-and-a-half percentage points;
  • Mismatches between the needs of employers and the skills and location of the unemployed, which account for about one-half of one percentage point;
  • Incentives from extensions of unemployment insurance for people to stay in the labor force and continue searching for work, which account for about one quarter of one percentage point; and.
  • Erosion of skills and the stigma attached to long-term unemployment—that is, employers’ perception that people who have been unemployed for a long time would be low-quality workers—which together account for about one-quarter of one percentage point.

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