The decline of 2.1 million workers between twenty-five and fifty-four years of age is especially troubling because these are the prime working years. It is still early, even 10 years out, for us to understand exactly the consequences of the Fed’s actions, for good or for ill.”“One in five employees lost their jobs at the beginning of the Great Recession. Unemployment reached 10%, but not the 25% of the Great Depression. “As we become a majority-minority nation, this tightening, if it becomes the new norm, together with the rising housing prices relative to wages, is likely to have the effect of pushing the nation into significantly lower aggregate home ownership rates,” Wachter says. Indeed, the current labor force has about six million fewer workers than had been projected in 2009, largely due to the Great Recession. For instance, consider the Federal Reserve Board’s focus on a 6.5 percent unemployment rate. “I think we need to look deeper into what a recession does to the internal organization of firms and their decision processes.” He suggests that the shedding of managers along with workers in 2008-2009 — a key difference compared to previous recessions, when fewer upper-tier jobs were lost — may have concentrated decision-making power inside firms.“But again, we don’t properly know why wages and job conditions stayed low, and until we do, we don’t know when this will change,” Barankay notes.

A recession, therefore, should not be thought as a one-time event that stresses individuals and families for a couple of years. In other words, if policymakers exclusively use the unemployment rate to guide their decisions, they will not achieve a full recovery from the Great Recession, and instead will be settling for a new normal.In May 2010, The Hamilton Project introduced a summary measure of recovery: Between the onset of the Great Recession in December 2007 and the low point of employment in February 2010, payroll employment in the United States fell by 8.7 million. Taking the current labor-force participation rate (63.2 percent), if the economy continues adding 169,000 jobs each month—as it did in August—the unemployment rate would drop to that level before the end of 2014. However, the broadest measure of employment—the employment-to-population ratio—was 58.6 percent and has remained close to that level for several years.Despite the consistent pattern of monthly gains, the nation’s goal of a full economic recovery remains elusive. The solid line shows how the jobs gap has evolved since the Great Recession began. “This is made more difficult by the fact that older persons frequently move a portion or all of their wealth to fixed-income assets. The Depression also followed 60 or 70 years of crisis and volatile markets.

“These are serious challenges, but it is very hard to see much of a response to them in the current political climate,” Bidwell adds.“There may be a pressing need for more government regulation, but even more pervasive is a much more corrosive sense that the system is broken.”As for what can or should be done to help those whose careers were disrupted by the Great Recession, Cappelli asks: done by whom? “However, since the end of the recession, as unemployment dropped all the way down to the lowest level since the 1970s, wages in the U.S. barely rose in real terms. The jobs gap also take into account the influx of new workers into the labor market. “Indeed, it is possible that the next recession will arrive before wages start to pick up again, and we might never find out.”It is hard to know what will keep the labor market healthy, Bidwell says.

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