Annals of the Great Recession II.

The Great Recession that began in 2007 ended in 2009.[1] Five years afterward, New York Times reporters asked how the recession had altered the American economy.[2] How was the economy different from before the recession began?

There were 1.5 million fewer construction jobs. Construction isn’t likely to fully revive. Even now, almost 20 percent of homeowners with mortgages owe more on their houses than the current market value of those homes. On average, these jobs had paid $55K a year.

There were 1.7 million fewer manufacturing jobs. Before the recession there were about 14 million Americans employed in manufacturing. That means that manufacturing employment fell by about 12 percent.

However, pre-recession manufacturing amounted to only about 10 percent of the labor force. Manufacturing jobs have been deserting America for decades. The loss of manufacturing jobs has been much more pronounced than the loss of manufacturing production. Manufacturers have used technology to increase production while cutting their work force. Overall, the loss of these high-wage jobs is probably permanent. On average, these jobs had paid $51K a year.

There were 1.5 million more health services jobs than before the recession.

The recession didn’t even dent technology companies. Technology companies both generated wealth for owners and created well-paying jobs. For example, the number of smartphones shipped rose from 20.1 million in 2007 to 136.6 million in 2013.

“Fracking” has boosted employment and income in states where it has been developed. It also has lowered energy costs. Chemicals and plastics consume a lot of energy, so cheap natural gas has given these industries a leg up. It also has improved the trade balance by reducing energy imports.

Health-related fields, energy, and technology appear to be the central pillars of the American economic future.

What did unemployment show? Population growth since the recession meant that the economy needed to add at least seven million more jobs than it did to absorb the growth. In Summer 2014, four million people were still counted as long-term unemployed and six million weren’t counted because they had just given up looking for work after many rebuffs. The slack labor market held down real wages as a low level of inflation continued. Hence, unemployment could stay high even as the economy grew. That, in turn, kept wages from rising in the way that they would in a tight labor market.

To get work, many people took lower-paying jobs than they had held before the recession. Eighty percent of Americans earn less than they did before the recession. Indeed, the median income fell from $55,627 in 2007 to $51,017 in June 2014. Many people also supplemented their income with government benefits like food stamps. In 2007 26.3 million people received food stamps; in 2009 47.6 million people received food stamps.

Continuing high unemployment and stagnant wages meant that it felt to any normal person that the recession remained in force. It’s hard to see the dawn when it is still so dark.

[1] The National Bureau of Economic Research has technical definitions for “recession” and “depression.” These have nothing to do with the popular perception of economic conditions. Therefore they become the butt of out-of-office politicians, late-night comedy-show hosts, and other people of that ilk.

[2] Shaila Dewan, Nelson D. Schwartz, and Alicia Parlapiano, “How the Recession Reshaped the Economy,” NYT, 15 June 2014, pp. 6-7.

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