Unemployment in the Great Recession
Compared to the 1980s
Richard A. Hobbie
Executive Director
National Association of State Workforce Agencies
Assisted by Gina Turrini
January 5, 2011
Please direct questions or comments to [email protected]
By some measures, the 2007-2009 recession was less severe than the recession that began in 1981. The number of regular state unemployment
claims (as a percentage of the workforce) and the unemployment rate, for example, were higher during the 1981-1982 recession than during the
2007-2009 recession. This was due in part to the lingering effects of the brief recession in the first half of 1980. However, the recovery after the
1981-1982 recession was faster and stronger than the current recovery has been. This is particularly striking when looking at job losses; jobs
were gained rapidly after the end of the 1981-1982 recession, but this has not been the case following the recent recession.
Although regular state initial unemployment claims as a percentage of the labor force was higher during all of the 1981-1982 recession than
during the recent recession, the number of continuing regular state claims1 as a percentage of the workforce is now higher for the recent
recession.
The number of discouraged workers2 as a percentage of the workforce was significantly higher for all of the 1981-1982 recession than for the
current recession, but it also decreased every quarter after that recession ended. In contrast, the number of discouraged workers as a
percentage of the workforce has continued to climb since the start of the recent recession, even after the recovery officially began in June 2009.
When these discouraged workers eventually reenter the workforce, it may cause unemployment to remain high.
Record levels of long-term unemployment and rising worker discouragement are the major lingering problems left by the Great Recession, and
there is no sign these problems will abate soon.
1
Continuing unemployment insurance claims are those that are continuing from a previous week, and therefore do not include new or initial unemployment
claims.
2
Discouraged workers are those who are no longer actively looking for work because they believe there is no job available to them.
During the early 1980s, the United States experienced two short recessions according to the National Bureau of Economic Research. The first
lasted from January 1980 to July 1980. The second lasted from July 1981 to November 1982. For the purposes of this comparison, we are
looking at the second recession, which was more similar to the Great Recession in severity and length. The recent recession lasted from
December 2007 to July 2009.
INITIAL UNEMPLOYMENT CLAIMS

During the 1981-1982 recession, the weekly average number of initial unemployment claims was higher than during most of the recent
recession, peaking at roughly 661,000 claims versus 643,000. However, there was both a steeper increase and a slower decline in the
number of initial unemployment claims during 2007-2009 (see Figure 1).

Adjusting for growth in the size of the labor force between the two periods (using “covered employment” as a proxy), the number of
initial unemployment claims has been much lower during the recent recession than during comparable months of the 1981-1982
recession. However, although the percentage of the labor force filing initial claims reached a higher peak during the 1981-1982
recession, it came down quite quickly. During the current recession, in contrast, this measure fell slowly and has remained fairly
stagnant for the past few 11 months (see Figure 2).

Currently, initial unemployment claims as a percentage of the labor force is still lower than it was for the comparable month during the
1981-1982 recession, but the difference is shrinking (see Figure 2).
FIGURE 1: Initial Unemployment Claims 4-Week Average
(Seasonally Adjusted)
700,000
End of the 20072009 Recession
650,000
1981-1982 Recession
600,000
2007-2009 Recession
550,000
End of the
1981-1982
Recession
500,000
450,000
400,000
350,000
300,000
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Months Since the Start of the Recession
FIGURE 2: 4-Week Average Initial Unemployment Claims as a Percentage of
Covered Employment (Seasonally Adjusted)
0.80
Percentage of Covered Employment
0.70
End of the 19811982 Recession
0.60
End of the 2007-2009 Recession
0.50
0.40
1981-1982 Recession
0.30
2007-2009 Recession
0.20
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Months Since the Start of the Recession
CONTINUING UNEMPLOYMENT CLAIMS

The average weekly number of continuing unemployment claims began slightly higher in the 1981-1982 recession than in the 2007-2009
recession (2,883,000 versus 2,735,750), but quickly became much greater during the 2007-2009 recession, due in part to the much
larger labor force (see Figure 3).

As a percentage of the labor force, the average number of continuing claims was much higher during the 1981-1982 recession for the
first several months. It was not until summer of 2009 (the end of the recent recession) that the average continuing claims as a
percentage of the labor force was higher during the recent recession than for the comparable month of the 1981-1982 recession (see
Figure 4).

Following the end of the 1981-1982 recession, the number of continuing unemployment claims continued to drop, while for the past
several months, weekly continuing claims as a percentage of the workforce has remained relatively constant (see Figure 4).
FIGURE 3: Continuing Unemployment Claims 4-Week Average
(Seasonally Adjusted)
7000000
6500000
End of the 20072009 Recession
6000000
5500000
5000000
End of the 1981-1982
Recession
4500000
4000000
3500000
1981-1982 Recession
3000000
2007-2009 Recession
2500000
2000000
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Months Since the Start of the Recession
FIGURE 4: 4-Week Average Continuing Claims as a Percentage of Covered
Employment (Seasonally Adjusted)
6.00
End of the 1981-1982
Recession
5.50
Percentage of Covered Employment
5.00
End of the 20072009 Recession
4.50
4.00
3.50
3.00
1981-1982 Recession
2.50
2007-2009 Recession
2.00
1.50
1.00
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Months Since the Start of the Recession
UNEMPLOYMENT RATE

The unemployment rate at the beginning of the 1981-1982 recession was more than 2 percentage points higher than at the beginning of
the current recession, and remained higher for almost two years (see Figure 5).

The unemployment rate peaked at almost 11 percent in 1981-1982, the same month that the recession officially ended. The
unemployment rate peaked several months after the official end of the recent recession in June 2009 at 10.1 percent (see Figure 5).

During the 1981-1982 recession, the unemployment rate came down much more rapidly than it has during the recent recession. As of
fall 2009, the unemployment rate for the current recession has remained higher than the unemployment rate for the comparable
months of the 1981-1982 recession. Worse, while at this point in the 1981-1982 recession unemployment was falling rapidly,
unemployment has remained relatively stagnant over the past year (see Figure 5).
FIGURE 5: Unemployment Rate (Seasonally Adjusted)
11.0%
End of the 1981-1982
Recession
10.0%
Unemployment Rate
9.0%
End of the 2007-2009
Recession
8.0%
7.0%
1981-1982 Recession
2007-2009 Recession
6.0%
5.0%
4.0%
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Months Since the Start of the Recession
CHANGES IN NON-FARM EMPLOYMENT

Although initially jobs were lost at a faster rate during the 1981-1982 recession (controlling for the size of the labor force), this changed
around one year into the recessions. Since the 12th month following the beginning of the recessions, job losses as a percentage of the
labor force have been much higher for the current recession than for the 1981-1982 recession (see Figure 6).

Job losses peaked at roughly the end of the 1981-1982 recession. During that month, jobs lost as a percentage of the labor force was
significantly higher for the current recession than for the 1981-1982 recession (4.10 percent versus 2.44 percent) (see Figure 6).

After the 1981-1982 recession ended, employment quickly increased. In contrast, after the end of the 2007-2009 recession, jobs
continued to be lost, and employment has not significantly improved (see Figure 6).
FIGURE 6: Cumulative Changes in Non-Farm Employment as a Percentage of
the Labor Force (Seasonally Adjusted)
4.00
3.00
Percentage of the Labor Force
2.00
1.00
0.00
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
-1.00
End of the 1981-1982 Recession
1981-1982 Recession
-2.00
2007-2009 Recession
-3.00
End of the 2007-2009 Recession
-4.00
-5.00
-6.00
Months Since the Start of the Recession
LONG-TERM UNEMPLOYMENT

One of the starkest differences between the 1981-1982 recession and the 2007-2009 recession is the percentage of the unemployed
who have been unemployed for 27 weeks or longer. Long-term unemployment has been higher for the 2007-2009 recession from the
start, and long-term unemployment as a percentage of total unemployment has grown much larger for the 2007-2009 recession than for
the 1981-1982 recession (see Figure 7).

After the end of the 1981-1982 recession, long-term unemployment continued to increase slowly for another seven months and then
began to decrease. In contrast, long-term unemployment increased after the official end of the current recession (July 2009) for another
10 months, and at a faster rate than during the 1981-1982 recession (see Figure 7).

Although the percent of the unemployed who have been unemployed for 27 weeks or longer has decreased for the past several months,
it still remains markedly higher than the comparable period after the 1981-1982 recession (see Figure 7).
FIGURE 7: Percent of the Unemployed Who Have Been Unemployed for 27
Weeks or Longer
(Seasonally Adjusted)
50.0%
44.3%
45.0%
Percentage of the Unemployed
40.0%
35.0%
1981-1982 Recession
End of the 20072009 Recession
2007-2009 Recession
30.0%
25.0%
20.0%
17.3%
End of the 19811982 Recession
15.0%
10.0%
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Months Since the Start of the Recession
DISCOURAGED WORKERS

The number of discouraged workers as a percentage of the total labor force was consistently higher during the 1981-1982 recession and
in the months after than during the 2007-2009 recession (see Figure 8).

Once the 1981-1982 recession ended, discouraged workers as a percentage of the labor force decreased every quarter. Even after the
end of the 2007-2009 recession, however, discouraged workers as a percentage of the labor force has continued to climb, but the
percentage is still much lower than during the 1981-1982 recession (see Figure 8).
FIGURE 8: Discouraged Workers as a Percentage of the Labor Force
(Seasonally Adjusted)
1.80
End of the 1981-1982
Recession
1.60
Percentage of the Labor Force
1.40
1.20
1981-1982 Recession
2007-2009 Recession
1.00
0.80
0.60
0.40
End of the 20072009 Recession
0.20
0.00
1
2
3
4
5
6
7
8
Quarters Since the Start of the Recession
9
10
11
12
SOURCES FOR DATA
Figures 1 – 4: Initial and continuing claims data, as well as covered employment, can be found at
http://www.ows.doleta.gov/unemploy/claims.asp. For these graphs, we calculated the four-week moving average using the most updated
weekly claims data available.
Figure 5: Monthly unemployment rates can be found http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=LNS14000000.
Figure 6: Information on monthly changes in private nonfarm employment can be found at
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES0000000001&output_view=net_1mth.
Information on the size of the labor force (which was used for Figure 6 and Figure 8) can be found
http://www.bls.gov/webapps/legacy/cpsatab1.htm.
Figure 7: Information on the long-term unemployed can be found http://www.bls.gov/webapps/legacy/cpsatab12.htm.
Figure 8: Information on discouraged workers is only available quarterly for 1980 to 1981. This information can be found in Bureau of Labor
Statistics new releases (http://www.bls.gov/opub/mlr/1985/02/art1full.pdf, http://www.bls.gov/opub/mlr/1984/02/art1full.pdf, and
http://www.bls.gov/opub/mlr/1983/02/art1full.pdf). For the Great Recession, we used monthly discouraged worker data from
http://www.bls.gov/webapps/legacy/cpsatab16.htm and then found the quarterly average to compare with the 1981-1982 recession.