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134 Monthly Lab. Rev. 3 (2011)
Employment Loss and the 2007-09 Recession: An Overview

handle is hein.journals/month134 and id is 421 raw text is: Employment loss and the 2007-09 recession: an overview 7he downturn in employment accompanying the 2007-09 recession was notable for its prolonged length, for affecting Christopher J. Goodman and Steven M. Mance Christopher J. Goodman and Steven M. Mance are economists in the Division of Current Employment Statistics in the Office of Employment and Unemployment Statistics at the Bureau of Labor Statistics. Email: goodman. christopher@bls.gov or mance.steven@bls.gov an especially wide range of industries, than any other downturn since World he U.S. economy is recovering from one of the longest and deepest re- cessions since the end of World War II (wVwi). Virtually no area of the economy remained unscathed from the December 2007-June 2009 recession,' par- ticularly the labor market. Nonfarm payroll employment, measured by the Current Em- ployment Statistics (CES) program, peaked in January 2008, 1 month after the peak in the business cycle.2 After relatively modest job losses in early 2008, the losses increased sharply in the latter half of the year, and declines spread beyond traditionally cyclical industries. The already-weak economy was jolted by financial market turmoil in fall 2008. The impact on employment was immediate and severe, with monthly job losses spiking to among the highest on record.' At its lowest point, February 2010, U.S. employment had declined by 8.8 million from its prerecession peak. (See chart 1.) The breadth and depth of the recession, particularly in comparison with recent recessions, has led some to label it The Great Recession.' In 2010, the la- bor market stabilized as employment grew modestly. Despite recent improvements, the labor market continues to struggle from the aftermath of a historic employment down- turn that is notable for its breadth, depth, and length. andfor being deeper War II Prelude to the recession The 2007-09 recession was preceded by a period of steady economic growth. Al- though initially slow to recover from a mild recession earlier in the decade, the labor market was healthy overall by 2006. The unemployment rate was low by historical standards, and payroll employment was steadily expanding. There remained a few areas of weakness; for example, employment in manufacturing and information never re- turned to prerecession levels. Nonetheless, most industries were adding jobs. Employment growth before the most recent recession was centered in three areas of the economy: education, healthcare, and various industries related to the housing market.6 Education and health care have long been growing industries in terms of both economic output and employment.7 Industries related to housing market activ- ity have historically been more cyclical. Te housing market boomed throughout the first half of the 2000s as home prices soared and construction activity rose to record levels.9 The rapid growth in housing drove eco- nomic growth in two ways. First, housing construction led to job growth in construc- tion as well as in complementary industries such as mortgage finance, real estate, con- struction-related manufacturing, and retail Monthly Labor Review * April 2011 3

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