answer: north dakota employment growth, june 2010 to june 2011 = + 5.1%
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Where Are the Jobs? Employment Stagnation after the Great Recession by Gary Burtless The Brookings Institution Washington, DC USA March 6, 2012. Answer: North Dakota Employment growth, June 2010 to June 2011 = + 5.1%. Answer: North Dakota Unemployment rate, December 2011 = 3.3%. - PowerPoint PPT PresentationTRANSCRIPT
Where Are the Jobs?Employment Stagnation after the Great Recession
by Gary BurtlessThe Brookings InstitutionWashington, DC USA
March 6, 2012
Answer: North Dakota Employment growth, June 2010 to June 2011 = +5.1%
Answer: North Dakota Unemployment rate, December 2011 = 3.3%
Scope of the crisis: Impact and aftermath The Great Recession ranks as worst since
World War II But it was not the Great Depression
The jump in unemployment was biggest in post-was era
The persistence of high unemployment was uncommonly severe
The consequences for job losers and new job entrants have been uncommonly harsh
Economic crisis: Government responses Most special government actions were familiar:
Temporary tax reductions Extensions of unemployment benefits Increased government investment in buildings,
roads, technology Unusual federal actions:
Generous health insurance subsidies for laid-off workers
Massive grants to state governments Emphasis on protecting education & training
Economic crisis: Political reaction to government response The average voter:
“Why aren’t things better already?” The average opposition politician:
“The other guys’ program made things worse . ..And look what’s happened to the deficit !”
The average political supporter of the stimulus:{Embarrassed silence.}
Scale of the employment challenge
-12 0 12 24 36 48-1
0
1
2
3
4
5
6
Change in Unemployment Rate (Percentage Points)
2008-09 recession
1981-82 recession
Months before or after previous business cycle peak
3.4 pctg. pts.
Rise in Unemployment Rate after the End of Two Economic Expansions
49 months
+6.8 pctg. pts.
Fall in Payroll Employment after the End of Two Economic Expansions
-4.0 pctg. pts.
49 months
-12 0 12 24 36 48-8
-6
-4
-2
0
2
4
6
8
Percent Change from Business-Cycle Peak of Payroll Employment
1981-82 recession2008-09 recession
Months before or after previous business cycle peak
-12 0 12 24 36 48-2
0
2
4
6
8
10
12
Change in Unemployment Rate in 2008-09 Recession and Re-covery (Percentage Points)
Months before or after previous business cycle peak
4.2 pctg. pts.
Rise in Unemployment Rate in 2008-2009 Recession & Recovery
48 months
Las Vegas
U.S. total3.3 pctg. pts.
-12 0 12 24 36 48-16
-12
-8
-4
0
4
Percent Change from Business-Cycle Peakof Payroll Employment
Months before or after previous business cycle peak
Fall in Payroll Employment after the End of Two Economic Expansions
-9.7 pctg. pts.
48 months
Las Vegas
U.S. total-4 pctg. pts.
Loss of household wealth
Index of Real U.S. House Prices, 1975-2011
Sources: Federal Housing Finance Agency and U.S. Department of Commerce, Bureau of Economic Analysis.
1974 1978 1982 1986 1990 1994 1998 2002 2006 201060
80
100
120
140
160
180
200
60
80
100
120
140
160
180
200House prices in 1980 = 100
U.S.A.
1974 1978 1982 1986 1990 1994 1998 2002 2006 201060
80
100
120
140
160
180
200
60
80
100
120
140
160
180
200House prices in 1980 = 100 +90%
-30%
Index of Real U.S. House Prices, 1975-2011
Sources: Federal Housing Finance Agency and U.S. Department of Commerce, Bureau of Economic Analysis.
U.S.A.
Las Vegas
1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 20100
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
S&P stock index (deflated using 2005 prices)
U.S. Stock Market Prices, 1950-2011
Source: Standard and Poors composite stock index.
Ratio of Net Household Wealth to Household Disposable Income, 1952-2011
Source: Board of Governors of the Federal Reserve System, Flow of Funds Accounts.
1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 20124.0
4.5
5.0
5.5
6.0
6.5
4.0
4.5
5.0
5.5
6.0
6.5
Net wealth / Income ratio
Automatic social protectionWith cross-national comparisons
Net Income Replacement in the Initial Period after Job Loss in 21 OECD Countries, 2005
Net benefit / Net earnings in employment (%)
4145 45
49 5154
5660 62
66 67 68 68 68 68 69 69 70 71
78 80
0
10
20
30
40
50
60
70
80
90G
reec
e
New
Zea
land
Aus
tralia
Irel
and
Uni
ted
Kin
gdom
Japa
n
Bel
gium
Uni
ted
Stat
es
Aus
tria
Ger
man
y
Fran
ce
Swed
en
Net
herla
nds
Italy
Finl
and
Spai
n
Nor
way
Den
mar
k
Can
ada
Switz
erla
nd
Portu
gal
CountrySource: OECD.
Source: OECD.
Maximum Duration of Unemployment Insurance Benefits in 21 Countries, 2007
USA
Italy
Austria
Germany
Sweden
Netherlands
France
Norway
Spain
Belgium *
Australia **
0
10
20
30
40
50
6 6 79 9 10
12 1214 15
18 18
23 23 24 24 24
4855 55 55
Durat ion of unemployment benefits(in months)
90 *
**
** 12. 2***
16.8
Maximu m U .S . total i n 2 008-2012 = 22.8 mo nth s
Stimulus programs
Special programs for the hard hit Unemployment benefit extensions of up to 73
weeks - - giving a total of 99 weeks protection Length of extension tied to state unemployment rate
Increases in monthly food stamp allotments Aid to the states for social assistance to
children Doubling of budget for training the
unemployed and hard-to-employ Increases in EITC and Child Tax Credit
Special programs for the not-so-afflicted Federal income tax cuts, phased out for folks
with high income
Payroll tax cut: 2-percentage-point reduction in Social Security tax
Special grants to Social Security recipients & VA recipients who do not pay income taxes
Impact of the Recession on Disposable and Before-Tax Market Income (per person), 1997 – 2011
2007
-I
2007
-II
2007
-III
2007
-IV
2008
-I
2008
-II
2008
-III
2008
-IV
2009
-I
2009
-II
2009
-III
2009
-IV
2010
-I
2010
-II
2010
-III
2010
-IV
2011
-I
2011
-II
2011
-III
2011
-IV88
92
96
100
104
100 100 100 100
101
103
100 100
99 99
9797
98
99 99 100 100 99 99 100100
9998
94
92
9090
91
9292 92
93 93 9393
2007-IV = 100
Disposable income
Market income
Impact of the Recession and Stimulus Package on Government Transfer Payments (per person), 1997 – 2011
2007
-I
2007
-II
2007
-III
2007
-IV
2008
-I
2008
-II
2008
-III
2008
-IV
2009
-I
2009
-II
2009
-III
2009
-IV
2010
-I
2010
-II
2010
-III
2010
-IV
2011
-I
2011
-II
2011
-III
2011
-IV85
90
95
100
105
110
115
120
125
101 99 99 100101
108
103
106
113
120119 119
121 121123
125123 123
121 120
10099 98
9492
90 90 9192 92 92 93 93 93 93
2007-IV = 100
Government transfer payments
Market income
+ $1,070
- $1,080
Combined Impact of the Recession and Stimulus Package on Net Transfers from the Government, 1997:IV – 2011:IV
2007.0 2007.5 2008.0 2008.5 2009.0 2009.5 2010.0 2010.5 2011.0 2011.5 2012.0-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
Dollars per person (2005 $)
Change in tax payments (per person)
Change in government benefits (per person)
Payroll Employment in Las-Vegas-area Construction Industry, 1980-2011
1980 1985 1990 1995 2000 2005 20100
20
40
60
80
100
120
140
160
180
0
20
40
60
80
100
120
140
160
180
Las Vegas construction employment (Employment in 2000 = 100)
2008 2009 2010 2011 20120
20
40
60
80
100
Percent of average vehicle assemblies in 1994-2007
U.S. Assembly of Motor Vehicles, 2008-2011
-21%
-69%
Impact of the Recession on Disposable and Before-Tax Market Income (per person), 1997 – 2011
2007
-I
2007
-II
2007
-III
2007
-IV
2008
-I
2008
-II
2008
-III
2008
-IV
2009
-I
2009
-II
2009
-III
2009
-IV
2010
-I
2010
-II
2010
-III
2010
-IV
2011
-I
2011
-II
2011
-III
2011
-IV88
92
96
100
104
100 100 100 100
101
103
100 100
99 99
9797
98
99 99 100 100 99 99 100100
9998
94
92
9090
91
9292 92
93 93 9393
2007-IV = 100
Disposable income
Market income
Composition & timing of the stimulus
Expected Stimulus Spending under the American Recovery and Reinvestment Act of 2009, 2009-2015
Sources: Congressional Budget Office and Joint Committee on Taxation.
Billions of current dollars
$65$141
$129
$46$22
$390
0
100
200
300
400
500
600
700
2009-2010 2011-2019Fiscal years
Fiscal relief for state governments
Direct income assistance & services
Infrastructure / technology investment
$22
Sources: Congressional Budget Office and Joint Committee on Taxation.
Expected Stimulus Spending under the American Recovery and Reinvestment Act of 2009, Fiscal Years 2009-2015
Stimulus Spending as % of Potential GDP
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2009 2010 2011 2012 2013 2014 2015
Fiscal year
Fiscal relief for state governments
Direct income assistance & services
Infrastructure / technology investment
Economic Crisis & Social Protection Impact and remedies What is old:
Automatic stabilization Standard gov’t reactions –
Tax cuts / UI benefit extensions / Gov’t capital projects
What is new: Massive federal aid for state governments Unusual focus on protecting education & training
What Congress avoided: Huge investment in public works
Congress worried the spending would be too slow