Unemployment and Earnings Losses: The Long-Term Impacts of The Great Recession on American Workers

The labor market has shown another month of growth, according to today's employment report. Payroll employment increased by 80,000 jobs in October; private sector employment was up by 104,000, while governments continued to shed jobs. Additionally, the employment gains in August and September were revised upward by a total of 102,000. On net, the unemployment rate ticked down slightly to 9.0 percent. Over the past year, payroll employment has increased by an average of 125,000 per month, just enough to accommodate new entrants to the labor force.

While these emerging signs of growth are promising, the United States remains a long way from full employment. One out of every eleven American workers is still unemployed. Further, many of those who have found new jobs have been reemployed at lower wages and history suggests that their reduced wages are likely to persist for years to come.

In this month’s analysis, The Hamilton Project explores the experiences of workers who lost their jobs during the height of the Great Recession, looking at the impacts of this economic shock on future earnings and reemployment prospects. We also continue to explore the “job gap,” or the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the 125,000 people who enter the labor force each month.