Mar 16th, 2009 at 5:01 pm
Current Job Losses: Not as Bad as the Great Depression
The current recession is “the worst since the Great Depression” but it’s still a good deal better than the Great Depression. Justin Fox has a chart that makes the point:
The data’s not directly comparable because farm employment was a bigger deal back then, but this is about as close to an apples-to-apples comparison as you can find and the apples of the 1930s were much, much, much worse than our apples.
30 Responses to “Current Job Losses: Not as Bad as the Great Depression”
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March 16th, 2009 at 5:08 pm
I prefer to look at this simplistically.
According to the Bureau of Labor statistics, 12.5 million Americans are now unemployed. In 1933, the worst year of the Great Depression, the number of unemployed reached 12.8 million.
March 16th, 2009 at 5:12 pm
Surely you and Fox are aware that non-farm unemployment was measured differently then and now.
March 16th, 2009 at 5:20 pm
@2:
from fox’s post:
can you enlighten about the significance of the differences?
March 16th, 2009 at 5:24 pm
Even though we’ve technically been in recession for more than one year, I would start the graph in September 08. Then it looks a lot more scary.
March 16th, 2009 at 5:24 pm
While September ‘29 was the peak of employment, the GD is usually marked as beginning late October (month 1, here), which is the date of the crash. In our cash the crash occurred Spetmber 15, approximately month 10, and this is now month 14. So our unemployment is about half of the GD. That’s putting aside whether the comparisons are the same – I suspect Fox should have used U6 for us, which I then suspect would be about the same.
max
['Nice try tho.']
March 16th, 2009 at 5:31 pm
Being unemployed, like having cancer, is a very personal experience and inflicts pain and suffering with ruthless indifference to its victim. Those experiencing it don’t really care how many people suffered the same fate in 1930. Quantifying the damage done in each era and contrasting it with the other is wasted time and energy. “I’m broke” or “I’m dying” mean the same thing to each person, now and then. Fixing today is the task.
March 16th, 2009 at 5:40 pm
@#3
U6, the unemployment measure probably closest to the one used 80 years ago, puts unemployment plus underemployment plus marginal attachment at 16%, up from 9.5% a year ago. So if the chart used that it would look a lot scarier. It’s not that one measure is right and another wrong; they measure different things. But things are worse than this chart makes it seem.
March 16th, 2009 at 5:58 pm
@#7
Then what’s with Susan Carter saying this is the right measure?
March 16th, 2009 at 6:03 pm
Put it this way, Matt. We’re well into the double digits in U6, which is the broader measure, and I believe a bit closer to how they did it way back when.
But you should also recall that in 1930 or 31 or 32 or 33 there was NO SAFETY NET. Now, we’re not anything like Germany or Japan, but we do have a hell of a lot more than they did in the 20s.
Thus we’re approaching GD levels of shitty even though we have protection.
This sucker’s going to get much, much worse.
March 16th, 2009 at 6:05 pm
Matt, ask Barry Ritholtz or CR at Calculated Risk or Yves over at Naked Capitalism, and basically the boys and girls who got this disaster right years before the economist profession say that U6 is probably closer.
March 16th, 2009 at 6:06 pm
Re: Put it this way, Matt. We’re well into the double digits in U6, which is the broader measure, and I believe a bit closer to how they did it way back when.
I’m not sure that’s right. Were part-time people counted as unemployed in the 30s?
March 16th, 2009 at 6:07 pm
Curses pronouns!
Should say that “we do have a hell of a lot more than anyone in the US did in the 20s”
March 16th, 2009 at 6:09 pm
I’m not sure that’s right. Were part-time people counted as unemployed in the 30s?
I don’t recall, but if we go by Shadow Stats, which purports to be pre-Reagan and Clinton adjustments for U and CPI, I think they might be.
March 16th, 2009 at 6:22 pm
While September ‘29 was the peak of employment, the GD is usually marked as beginning late October (month 1, here), which is the date of the crash. In our cash the crash occurred Spetmber 15, approximately month 10, and this is now month 14. So our unemployment is about half of the GD.
That’s some stellar reasoning, max. First off, it’s not clear why a (stock market) crash is any better a starting point for the chart than the month employment peaked. We had a credit market crash in July/August 2007; why not start there?
Even using your timing assumption though, you’re clearly misreading the chart. You say the relevant period for the current curve is from month 10-14. We don’t have the data, but it appears the chart drops from -1% to -3% in those months (maybe -1.3% to -3.3% if you try to look close); either way it’s a drop of 2%. From month 1-5 (same number of months) on the Great Depression curve, the drop is from -0.5% (or less) to slightly worse than -9%, a drop of at least 8.5%. So… our unemployment is less than one fourth that of the great depression.
We have a long long way to go before we start comparing the employment situation to the 1930s. We’re not even to 1982 yet.
March 16th, 2009 at 6:44 pm
If you actually look at the chart you will notice that the measure here is not unemployment, but total employment. The chart is percent decline from peak employment against month. So unless you are arguing that total employment was measured differently back then, I don’t see what the point is re. U6. Obviously farm employment could really skew this data since we know that farm employment was a much larger portion of total employment in 1929, and if we assume that farm employment did not plunge to the extent that non-farm employment did.
March 16th, 2009 at 9:01 pm
Thatcher, then Reagan, changed the way unemployment is measured to put lipstick on pigs in their barnyards(Canadian barnyard numbers, too).
I’ve seen somewhere that if pre-Thatcher and Carter-era criteria were in use then U.S. unemployed today would be closer to 16-17%.
Can anyone confirm this?
March 16th, 2009 at 9:09 pm
Wait, wait…the Great Depression sucked?
Thank you for that.
Al,
More like comparing the Korean War and the Iraq War.
March 17th, 2009 at 1:04 am
yes, the way that UNemployment is calculated has changed over the years. Not sure the particular history.
But this is a chart of decline in total employment.
March 17th, 2009 at 1:06 am
Of course being unemployed is horrible, terrible, nobody wants to be there. But it is profoundly bizarre to argue that because of this fact we should be uninterested in the statistics of total unemployment. The reduction of this is, of course, that we shouldn’t care about the difference between having one person unemployed in the economy and having only one person employed.
March 17th, 2009 at 6:24 am
Re: I’ve seen somewhere that if pre-Thatcher and Carter-era criteria were in use then U.S. unemployed today would be closer to 16-17%.
Can anyone confirm this?
It is not true. There has been no change in the way unemployment is calculated since modern calculations began late in the Great Depression. What was changed was the way inflation is calculated.
March 17th, 2009 at 6:25 am
Re: I’ve seen somewhere that if pre-Thatcher and Carter-era criteria were in use then U.S. unemployed today would be closer to 16-17%.
Can anyone confirm this?
It is not true. There has been no change in the way unemployment is calculated since modern calculations began late in the Great Depression. What was changed was the way inflation is calculated.
March 22nd, 2009 at 9:50 pm
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April 3rd, 2009 at 11:22 am
For our current job losses to be comparable to the Great Depression we’d have to have more than 87.5M (350M x 25% or greater) people out of work.
April 3rd, 2009 at 11:47 am
Look, the simple fact is, its impossible to compare the GD to todays economic crysis. You could say they were worse off because theyre percentages were higher, or you could say we’re worse off because our actual numbers are higher. trying to compare the GD with today is like comparing world war 2 to the Iraqi war. It’s simply impossible.
All we can do today is unite together and try and fix this thing. The economy is in our hands and if we dont fix it then the upcoming generation is, for lack of a better word, screwed.
April 3rd, 2009 at 11:50 am
I am a teen and just about to start my journy into life. I feel like the current “lead” generation ruined the economy to near unfixability, and now we are screwed. I’m not sure anyone can fix this, and it’s definately not getting better while you guys are in charge.
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