Is U.S. Unemployment Lower than 2007-2009 Pre-recession Levels?

The Business Cycle Dating Committee of the National Bureau of Economic Research dates the last U.S. recession from December 2007 to June 2009, marking this 18-month period the longest and worst recession since the Great Depression and World War II. During that time, the U.S. lost an estimated 8.7 million jobs, household wealth fell roughly $16.4 trillion, and real GDP contracted by an annual rate of 3.5%.

Unemployment Rate Over Time

Unemp76to2014

The above animation shows the increases and decreases in unemployment rates over time for each state since 1976, the last year of statistics available from the U.S. Bureau of Labor and Statistics at the state level. West Virginia consistently experienced the worst unemployment rates over time, recording a high of 17.8% in 1983, the year following the previous worst U.S. recession, while the Dakotas and Nebraska tended to have the lowest rates, of 5.6% or less, over the last 39 years.

During the 2007-2009 recession, 18 states (Nevada, Michigan, California, Rhode Island, South Carolina, Florida, North Carolina, Oregon, Alabama, Georgia, Arizona, Illinois, Indiana, Mississippi, Ohio, Kentucky, Washington, and Tennessee) had unemployment rates above 10% for one or more years while the Dakotas and Nebraska faced only 5% or less, due primarily to booming oil production.

In the first quarter of 2015, 18 states had unemployment rates  lower than the 2007-2009 pre-recession levels (Michigan, Kentucky, Minnesota, Ohio, Nebraska, Wisconsin, Kansas, Vermont, Oklahoma, Texas, North Dakota, Alaska, Massachusetts, Oregon, Arkansas, New Hampshire, Colorado, and Missouri) and 15 states and the District of Columbia (Tennessee, Alabama, Florida, Indiana, Georgia, Virginia, Maine, Connecticut, Maryland, West Virginia, Iowa, District of Columbia, New Jersey, New Mexico, Arizona, and Nevada) had rates 1.6-2.6% above pre-recession rates. The remaining 17 states showed marginal increases of 0.6-1.3%.

Regionally, the Midwest inched up with a 5% unemployment rate, followed by the South (5.3%), the Northeast (5.6%), and the West (5.9%) in the first quarter of 2015. The Midwest and the South had lower rates than the national average of 5.5% during the first quarter of 2015.

Illinois Unemployment Rate Over Time

unemp_IL_USA

The overall U.S. unemployment rate experienced four major spikes and dips between 1976 and 2014. During this 39 year period, the highest peak, 10.8%, was seen during the global recession during Regan’s presidency in November-/December 1982, which was considered the worst U.S. recession since the Great Depression up to that point. In April 2000, the national unemployment average reached a 30-year low of 3.8%, mainly due to job growth during Clinton’s administration.

Similar to the national trend, Illinois saw a high rate of 13.1% in early 1983, almost 2.25 percentage points higher than the national historic high since 1976. The lowest rate of 4.1% was seen at the end of 1999. Click here to view state-by-state historic highs and lows.

Few years prior to the 2007-2009 recession, Illinois’ unemployment rate hovered around 5%. It increased to 10.4% in 2010, but has ticked downward since then. The rate in the first quarter of 2015 was 6%, one whole percentage point above pre-recession levels, and almost the same as the national rate of 5.5% for that period.

Unemployment Rates by Race and Gender

unemp_race

Looking at race in the first quarter of 2015, Blacks had the highest unemployment rates, followed by Hispanics. Asians and Whites had lower rates due to higher educational levels. The article published by Pew Research found that since 1954, Black workers’ unemployment rates have consistently been double that of Whites.

According to the U.S. Department of Labor and Statistics, in January 2007, 11 months before the recession began, Black unemployment was 8.3% and Hispanic 5.6%. Almost one year after the recession ended, Black and Hispanic unemployment doubled; to reach the pre-recession level, the Black workforce unemployment rate must reduce by another 2.1% and Hispanic by 1.7%.

In March 2015, the black unemployment rate was almost twice that of the national rate. Among the major racial groups, the two dominant minority groups (Blacks and Hispanics) collectively had an 18% unemployment rate at the end of the first quarter of 2015. Juxtaposing this with the current rate of unemployment for Asian and White workers, that is below the national average (5.8%). Their unemployment rates have edged down to almost the pre-recession levels, with Asians only 0.6% and Whites 1% higher than their January 2007 rates.

In the race-gender category, the Black male workforce seems to be in a constant state of recession, with the worst unemployment rate (11.6%) compared to their Hispanic, White and Asian counterparts in the first quarter of 2015. Their unemployment is twice the national rate and at least 2.2% higher than the White unemployment rate during the peak of the recession. This is mainly due to higher incarceration rates (6 times that of White males) and lower levels of education, training, skills, and social capital.

During first quarter of 2015, female unemployment was at least 1%-2% lower than male unemployment rates irrespective of the racial group. This could be attributed to wage inequality between the genders.

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Author: Nandhini Gulasingam

Nandhini Gulasingam is a Senior Analyst for IT Solutions at the Social Science Research Center (SSRC) where she manages GIS, database, web development projects for the SSRC and is developing data visualization techniques for use in the social and behavioral sciences. She is also an adjunct faculty member in the Department of Geography where she teaches graduate and undergraduate courses on Geographic Information Systems (GIS).

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