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Is Unemployment as Bad as During the Great Depression?
It is difficult to compare current unemployment with that during the Great Depression. In the Depression, unemployment numbers weren't tracked very consistently, and the U-3 and U-6 statistics we use today weren't used back then. And statistical "adjustments" such as the "birth-death model" are being used today that weren't used in the 1930s.
But let's discuss the facts we do know.
The Wall Street Journal noted in July 2009:
The average length of unemployment is higher than it's been since government began tracking the data in 1948.
***
The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.
The Christian Science Monitor wrote an article in June entitled, "Length of unemployment reaches Great Depression levels".
60 Minutes - in a must-watch segment - notes that our current situation tops the Great Depression in one respect: never had we had a recession this deep with a recovery this flat. 60 Minutes points out that unemployment has been at 9.5% or above for 14 months:
Pulitzer Prize-winning historian David M. Kennedy notes in Freedom From Fear: The American People in Depression and War, 1929-1945 (Oxford, 1999) that - during Herbert Hoover's presidency, more than 13 million Americans lost their jobs. Of those, 62% found themselves out of work for longer than a year; 44% longer than two years; 24% longer than three years; and 11% longer than four years.
Blytic calculates that the current average duration of unemployment is some 32 weeks, the median duration is around 2o weeks, and there are approximately 6 million people unemployed for 27 weeks or longer.
Moreover, employers are discriminating against job applicants who are currently unemployed, which will almost certainly prolong the duration of joblessness.
As I noted in January 2009:
In 1930, there were 123 million Americans.
At the height of the Depression in 1933, 24.9% of the total work force or 11,385,000 people, were unemployed.
Will unemployment reach 25% during this current crisis?
I don't know. But the number of people unemployed will be higher than during the Depression.
Specifically, there are currently some 300 million Americans, 154.4 million of whom are in the work force.
Unemployment is expected to exceed 10% by many economists, and Obama "has warned that the unemployment rate will explode to at least 10% in 2009".
10 percent of 154 million is 15 million people out of work - more than during the Great Depression.
Given that the broader U-6 measure of unemployment is currently around 17% (ShadowStats.com puts the figure at 22%, and some put it even higher), the current numbers are that much worse.
But it is important to look at some details.
For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:
- California: 21.9
- Nevada: 21.5
- Michigan 21.6
- Oregon 20.1
In the past year, unemployment has grown the fastest in the mountain West.
And certain races and age groups have gotten hit hard.
According to Congress' Joint Economic Committee:
By February 2010, the U-6 rate for African Americans rose to 24.9 percent.
34.5% of young African American men were unemployed in October 2009.
As the Center for Immigration Studies noted last December:
Unemployment rates for less-educated and younger workers:
- As of the third quarter of 2009, the overall unemployment rate for native-born Americans is 9.5 percent; the U-6 measure shows it as 15.9 percent.
- The unemployment rate for natives with a high school degree or less is 13.1 percent. Their U-6 measure is 21.9 percent.
- The unemployment rate for natives with less than a high school education is 20.5 percent. Their U-6 measure is 32.4 percent.
- The unemployment rate for young native-born Americans (18-29) who have only a high school education is 19 percent. Their U-6 measure is 31.2 percent.
- The unemployment rate for native-born blacks with less than a high school education is 28.8 percent. Their U-6 measure is 42.2 percent.
- The unemployment rate for young native-born blacks (18-29) with only a high school education is 27.1 percent. Their U-6 measure is 39.8 percent.
- The unemployment rate for native-born Hispanics with less than a high school education is 23.2 percent. Their U-6 measure is 35.6 percent.
- The unemployment rate for young native-born Hispanics (18-29) with only a high school degree is 20.9 percent. Their U-6 measure is 33.9 percent.
No wonder Chris Tilly - director of the Institute for Research on Labor and Employment at UCLA - says that African-Americans and high school dropouts are experiencing depression-level unemployment.
And as I have previously noted, unemployment for those who earn $150,000 or more is only 3%, while unemployment for the poor is 31%.
The bottom line is that it is difficult to compare current unemployment with what occurred during the Great Depression. In some ways things seem better now. In other ways, they don't.
Factors like where you live, race, income and age greatly effect one's experience of the severity of unemployment in America.
In addition, wages have plummeted for those who are employed. As Pulitzer Prize-winning tax reporter David Cay Johnston notes:
Every 34th wage earner in America in 2008 went all of 2009 without
And see this, this, and this.
earning a single dollar, new data from the Social Security
Administration show. Total wages, median wages, and average wages all
declined....
- advertisements -
In other employment-related news (not the Onion): Jonah Falcon, Man With World's Largest Penis, Unemployed In New York
It really doesn't make sense to compare '30s unemployment figures to today's. Not useful. May as well compare the number of high-school graduates, too.
Much of the USA was still agrarian. Women hadn't entered the workforce. Black Americans were still being sharecropped in much of the Southern region of the country.
The 25% unemployment figure bandied about concerning the '30s would have only applied to a very small segment of population in the first place.
Too much has changed for this to mean anything.
You have to be seriously dumb, seriously handicapped, seriously unmotivated, or seriously lying about your income to collect benefits if you cannot earn a single dollar of income in a year. Yeah, there are some, perhaps more than a few who need a safety net, but it seems to have made it too easy for too many to simply give up.
It's time to Hope for Change that you can really believe in by voting responsibly on November 2.
Don't confuse descriptive statistics for causality. But I've often wondered, why is it that the <ethnic/social group of your choice> doesn't look at their situation and say "we've been aggrieved by <this situation> because they should have done <x> when they actually did <meatloaf>.
Examples include many under the <gov't agency> umbrella supposed to improve <areas under agency's charter>.
- Ned
<\grammar police>
The video didn't seem to work for me on ZH so I googled it and found the link. Thanks for posting. I think 60 minutes did a great job of reminding American's of some of the problems we face. I think giving the news out in small bits helps people comprehend it better. If anyone thinks this recession is over, this little news bit confirms we aren't even close.
goldman sachs should be made a ground zero of sorts.
http://www.imf.org/external/pubs/ft/weo/2010/02/pdf/c2.pdf
They do not care GW. Hot Money is the chase and who lets it in IMO
This chapter begins with Asia, which is leading the global recovery. Then it turns to North America, where there is renewed concern that the recovery may be stalling, with significant implications for the rest of the world. Next, the chapter reviews Europe’s economic and policy challenges, which in many ways mirror those at the global level: the need for demand rebalancing within the region, financial sector repair, and medium-term fiscal consolidation. It then outlines the wide range of developments and prospects in Latin America and the Caribbean (LAC), the Commonwealth of Independent States (CIS), the Middle East and North Africa (MENA), and sub- Saharan Africa.
All our Sales have not impeded net working capital to date GW reported in $ Are there proplems? Yes, and opportunities since the Sun covers half the earth as it rotates
GIANT SUCKING SOUND ALERT! WHOOOOP WHOOOOP WHOOOOP
You always have to keep your credit excellent until the last minute. Borrow everything you can to keep your head above water in the hopes it will pass and you will be able to catch up. You want to be so much in Debt that it is the Banks problem and not yours. As Donald Trump always said if the Bankers are worried about how much you owe why should you worry.
I always told my Children if you get into financial trouble borrow to the hilt and buy a new car immediatly. With a car even if you go into Bankruptcy no one will want it because it will be worth less than you owe. This way you will at least have reliable transportation for 5 to 7 years. Just enough time to climb out of your problem or any credit hit.
I think the Fed is doing the same thing. Print all you can in the hopes that the economy will turn around and it will be easier to pay it back.
Good advice. But they usually take your car, sell it and put the amount of the gap loss on your credit report as a judgement.
If the banks go down it goes without saying that the credit reporting bureaus must be gone as well. They are just filthy accomplices that allow the banks to avoid allegations of discrimination.
+1000000000
Unemployment will continue to climb, irrespective of what the BLS says. They are doing everything in their power to "disappear" lost jobs each reporting period. I place teh rate much higher than is reported, even higher than John Williams at Shadowstats does. Here in Florida, the outlook is abyssmal.
I live in Silicon Valley. Did anyone notice that all of the profiled unemployed in the video were middle aged white people? No Indians or Asians. Gotta protect those H1-Bs as we clearly don't have enough talented professional Americans...
Absolutely..I keep telling everyone that the recession is over because the corps are hiring!!! My company is hiring and obviously the unemployment numbers are all lies because the only people they bring in for these positions are Indians. The Americans are all obviously working already.
Oh...and the even better news is the hot liquidity is allowing companies to invest in America. My sister-in-law is eagerly looking forward to her unemployment from Verisign after she gets done training in the Indian accountants that came to take over their jobs. The $40K she was making is just an exhorbinant salary to be paying anyone to live in the festering paradise that is Cali...
Go America, Go!!!!
Watch what happens in Caifornia if Brown gets elected Governor...taxes go up, more businesses leave, affluent people leave, the state goes bankrupt an Mexico offers to take it back for a price. Obama agrees subject to allowing non citizens to vote, as long as they vote Democratic. If Whitman becomes Governor, taxes do not go up, nothing else happens, the state goes bankrupt, social welfare ceases, illegal aliens go somewhere that has better social/welfare programs, the electorate toss out the liberals running the state, business starts to flourish again and California begins the road to recovery.
California has one option: Bankruptcy.
You mean Default, right?
Denial to the death.
When my Son was having trouble with his start up Company my Daughter went in and took over his books to help him out. Years later my Sons Business grew. Then when my Daughter got a Job she hated my Son hired her so she could quit and work for him. Thank God I raised them right.
Didn't a lot of people return to family farms during the Depression and were counted as being employed? Also in the west there was a boom in gold prospecting would those people be counted as employed?
if your standing on the corner with your hand out, the administration considers you self employed
Thats how blacks and mexicans look for work.
Those weren't the words you really wanted to use were they?
So tell me, how do whites do it? Can't hurt to have too many methods of approach. Everybody needs a job these days...
That is free entrepreneurship for you.
That's free entrepreneurship in foodstampistan.
It already IS greater than 25%, unless of course you believe the NONSENSE being spouted by the criminals and liars enrobed in government regalia.
One Word: WORSE.
And as for:
Well, there is NOTHING left to recover...
Given that the broader U-6 measure of unemployment is currently around 17%22%), the current numbers are that much worse. (ShadowStats.com puts the figure at
But it is important to look at some details.
For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:
How about 30.5% defacto unemployment across America?
http://cwcs.ysu.edu/resources/cwcs-projects/defacto
What's defacto unemployment rate?