Jobless Claims Would Have to Top 900,000 To Reach the Same Levels of the 1970s and 1980s
Update: I found a longer dataset for jobless claims and was able to update the post below.
A Google News search for the two phrases "unemployment claims" and "26 years" results in more than 100 news items that report some version of this story: "The number of new U.S. unemployment claims rose to 589,000 in the past week, matching the highest level in more than 26 years." But what most news reports failed to mention is that today's labor force (154.4 million) is almost 40% higher than in 1983 (110.7 million), see chart above (click to enlarge), meaning that unadjusted comparisons of jobless claims today to 1983 are relatively meaningless. The chart below shows monthly jobless claims as a percentage of the total labor force, from Jan. 1973 to December 2008 (should be approximately the same in January 2009). The current level of jobless claims as a percent of the labor force (0.355%) is above the 2001 recession, but below the four previous recessions (1973-1975, 1980, 1981-1982 and 1990-1991). To reach the same levels of jobless claims (as a percent of the labor force) as the recessions of the 1970s and 1980s (0.60%), we would have to see jobless claims today reach levels above 900,000.
9 Comments:
The apparent inability of journalists and others to normalize numbers or make them dimensionless aggravates me to no end. And I don't think people even realize that this raises problems with their analysis.
We are getting there, don't worry about it.
According to various promises Obama made during the campaign, he has a 16 point plan for dealing with the unemployment problem. It consists of this:
1) Raise the top income tax rate to take more money away from those whose savings and investments are one of the main sources of capital that creates jobs and makes possible productivity improvements that raise wages.
2) Raise the corporate tax rate, thereby making American businesses even less competitive with foreign companies.
3) Raise the dividend tax rate thereby reducing the incentive to invest in American businesses.
4) Raise the capital gains tax rate thereby reducing the incentive to invest, period.
5) Create a new tax on businesses that outsource jobs overseas
6) Punish the oil companies by seizing a portion of their profits, thereby making gasoline, heating oil and a whole range of petroleum-based products more expensive.
7) Punish the pharmaceutical companies by seizing a portion of their profits, thereby making a whole range of life-saving drugs more expensive and reducing the incentive to develop more of them.
8) "Spread the wealth around" with whatever re-distribution schemes he can get away with, thereby reducing the incentive to work and be productive.
9) Eliminate the secret ballot and allow union organizers to bring intimidation and threats to bear directly on anyone who dares to oppose a union.
10) Raise the minimum wage by 50%, thereby throwing out of work many additional marginal workers.
11) Impose "cap and trade" limits on CO2 emissions that will, in Obama’s words, "cause electricity rates to soar" and "bankrupt anyone who builds a coal-fired power plant".
12) Force all businesses to pay 100% of their employee's healthcare costs, thereby making them still less competitive with foreign companies.
13) Complete the nationalization of the healthcare industry, thereby insuring that thousands will die waiting for medical services as they do in Great Britain. (That might actually reduce unemployment by killing off workers.)
14) Impose protectionist trade restrictions by "renegotiating" existing free trade agreements, thereby increasing the cost to consumers of thousands of imported products.
15) Commit America to funding U.N. anti-poverty programs, so that American taxpayers are not only bled to fund our home-grown bums and deadbeats, but the whole world’s as well.
16) Eliminate a trillion dollars of private spending so he can create a trillion dollars of government spending.
I do believe this program will have an effect on unemployment.
I wonder about the differences in jobless benefits from time period to time period. If there are, e.g., better/more/longer jobless benefits now than in the past then the incentive to find another job quickly now is less than what it was previously.
Michael,
You are forgetting:
17) Eliminating "tax loopholes for oil companies". The examples given in Mr.Obama's plan were capital cost allowance and foreign tax deduction (ie. legitimate business expenses)
18) Creating refundable tax credits for people who currently do not pay taxes and referring to these tax credits as tax cuts.
The most audacious hope is that Obama's recent attempts to distance himself from what he calls "campaign rhetoric" might translate into a more centrist approach. Judging by the size of the stimulus plan, that appears to be a very faint hope.
Much in Obama stimulus bill won't hit economy anytime soon.
Technical point.
Wouldn't using employed persons rather than the labor force be better because you have to be employed to be eligible for unemployment compensation.
If the unemployment rate is 4% at one cyclical peak and 6% in the other one this would make a significant difference in the two ratios of labor force and employed persons. It could be significant now because of the weak employment growth this cycle.
But you are right that the number of claims should be normalized.
5) Create a new tax on businesses that outsource jobs overseas
Construct it so it has no real room for loopholes, and it will save jobs from being lost.
Why should we decide to allow these companies to use this to bypass having to deal with citizens here?
Let this one happen, and make sure NASSCOM is left unhappy.
9) Eliminate the secret ballot and allow union organizers to bring intimidation and threats to bear directly on anyone who dares to oppose a union.
How about eliminating the adversity in the first place? Either you do that, or this kind of revenge is what you get and deserve.
14) Impose protectionist trade restrictions by "renegotiating" existing free trade agreements, thereby removing the flood of junk .
Fixed that for you.
It will not impoverish us if junk no longer exists as an option.
It will improve quality and reject places like China who do not get quality at all.
> 14) Impose protectionist trade restrictions by "renegotiating" existing free trade agreements,
Oh, YEAH, more protectionism!!!
THAT behavior hasn't long since been an acknowledged primary cause of depth and longevity of The Great Depression, no sirree, Bob!!
We are, Truly, in the presence of extreme -- I say, I SAY... EXTREME -- genius, folks.
Can't ya hear the economy crumbling already?
Take a bow, seth. The brilliance of your proposals is truly unbounded.
Yep.
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