Economy

The economic crisis that swept around the globe at the end of the last decade has left economies struggling to regain their footing. Massive job losses, declining asset values, and high unemployment have been common in communities across the US and around the world. Economic indicators began signaling signs of recovery as early as mid-2009. Yet for many, a meaningful recovery has yet to arrive.

Recession, Recovery, and Restructuring?
One of the most striking trends that has emerged from the Great Recession, as it has been labeled, is persistent high unemployment. While employment in some sectors has started to rebound, others continue to lag despite record corporate earnings. This situation reflects a lingering uncertainty on the part of employers. For many, the harrowing experience of layoffs and cost-cutting of the last few years has left an indelible mark. Companies have been slow to take on new workers, taking advantage of productivity gains eked out using lean staffing patterns they’ve relied on to get them through the downturn. Employers have also turned to other employment arrangements, like contracting or staffing agencies, as a means to avoid hiring. There is at least anecdotal evidence this change may be with us for some time to come.

For some sectors of the economy, the recession simply accelerated a restructuring of employment that was already underway. US manufacturing employment has been declining relative to productivity for decades, reflecting the impact of technological advances and international trade. These forces have also reshaped the service sector; jobs like ticket agents, file clerks, and secretaries are likely to be lost for good. Even before the downturn, the US was experiencing a loss of middle-skills jobs (those requiring education beyond high school, but less than a four-year degree), although demand for occupations that fall into this group is projected to rise in the coming years.

Data Visualization: The Geography of Jobs

The impact of the recession varied greatly across the country. In 2008, TIP Strategies created an animated map to demonstrate the net change in jobs over a rolling 12-month period in the top 100 metropolitan areas. The size of the bubbles on the map represents the change in jobs from April 2009 to April 2010, July 2008 to July 2009, and so on. As of August 2010, many areas of the country had begun to show signs of recovery, with most metropolitan areas seeing a net increase in jobs from August 2009. But this uptick should be viewed with caution. An increase over the prior 12-month period, while good news, is a long way from meaning that all jobs lost during the course of the recession have been regained. The figures are also only an indication of total employment; the composition of employment is not accounted for. In short, some cities show signs of improvement, but we are still far from a full recovery.

How does the Great Recession Compare to Previous Recessions?
In short, the Great Recession has earned its name — it is deeper than previous recessions, and it will take a long time to regain all of the jobs shed since 2007. In terms of total unemployment, there were more job losses in this recession than in previous recessions. Another sobering reality is that the recovery time from each successive recession has been increasing in length. For example, it took 10 months to recover from the 1980 recession and 49 months to recover from the 2001 "Dot Com Bust."

Chart: Recessionary Employment Trends
This chart compares the six most recent recessions in the United States (1974-present) in terms of employment (100 = peak, or full employment) and the number of months it took the economy to regain all of the jobs lost in the recession (months are numbered along the horizontal axis).

Job Losses by Sector
Unemployment isn't the only significant structural shift in the national economy since the recession--there has also been a marked adjustment in employment across sectors. According to Planet Money, "the total number of jobs in America fell by nearly two million over the past decade. But this big-picture stagnation — which occurred as the population grew by about 20 million — masks big shifts, both over time and across different industries."

A Decade of Jobs in America from Planet Money on Vimeo.

The video's final image shows the tally for jobs lost and gained over the past decade. It speaks to some of the big shifts in the American economy. Manufacturing lost more than five million jobs, as the sector continued to move toward complex, high-tech products, and away from producing the everyday goods that require huge numbers of workers standing at assembly lines, churning out products. Construction, still reeling from the real estate bust and a glut of houses that seems likely to persist for quite a while, lost hundreds of thousands of jobs.

The service sector did better — particularly in areas where fewer jobs have been automated. Health care was the decade's big winner, but private education and leisure also made significant gains. Government jobs also increased over the course of the decade, particularly at the state and local level. But that trend may already be reversing itself. The number of state and local government jobs fell last year. And growing budget constraints and pension pressures mean those cuts are likely to continue.

Guiding a Local Recovery
Although economic development professionals are tasked with addressing local challenges, the issues they face are inextricably linked to broader national and global trends. Understanding the context within which your local economy operates is critical for determining a future course of action. In addition to working with the businesses in your area to better understand their needs and offer support, identifying and understanding opportunities in target and emerging industries that build from the assets in your community is an important first step in any strategy for recovery.

For more tips on how to position your community for recovery, click here to see Jon's recommendations.

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