Understanding the Severity of the Current Labor Slump
Publication Date: November 2003
Publisher(s): Economic Policy Institute
Many observers of the labor market have underestimated the severity of the current labor slump by focusing on the unemployment rate and the gains in real hourly wages. In fact, the current slump is setting records for severity in terms of sustained loss of jobs, the increase in labor market slack, and the decline in aggregate wage and salary income.
A number of factors must be considered in order to understand the severity of the current labor slump. The U.S. labor market has remained mired in a slump since the recession began in March 2001. This Briefing Paper compares the severity of the current labor slump with that of earlier slumps in terms of both depth and duration, and in terms of both absolute decline and the decline relative to a target based on keeping pace with population growth.
Because of the extended period of job loss, the current labor slump is the most severe on record by several important measures.