Global Economic Watch


Recent Posts



  • SF Fed Economic Letter: 'Career Changes Decline During Recessions'

    The great recession has spawned something of a jobless recovery--at least for the long term unemployed. As Carlos Carrillo-Tudela , Bart Hobijn , and Ludo Visschers note in a new Economic Letter for the San Francisco Fed , many of the jobs lost during the recession have gone away. So it would make sense if we saw a lot of people changing careers. But that isn't happening. Figure 1 shows the fraction of hires out of unemployment that change industries (panel A) and occupations, (panel B). The shaded areas depict recessions. Because industry and occupation definitions and classification systems have changed over time, data are not continuous for the period we study, as shown by the vertical dashed lines in 1983, 1992, and 2003. Two other dashed lines in 1985 and 1995 show periods when we cannot link CPS respondents across surveys. The more detailed our industry and occupation categories are, the more career changes we identify. This is why the line showing changes in industry and occupation groups at the major level lies below that showing the most detailed code level in both panels. Though the levels of industry and occupational mobility vary with the level of detail, the fluctuations in mobility over the business cycle are remarkably similar for both levels. These patterns for occupational switches also appear in data from the U.S. Census Bureau’s Survey of Income and Program Participation (see Carillo-Tudela and Visschers 2013). The common cyclical pattern between these series clearly shows that the fraction of unemployed people who change careers upon getting rehired declines during recessions. All the recessions in our sample follow this pattern, from those in the early 1980s to the Great Recession that started in 2007. Likewise, the figures show that career changes increase when the labor market is strong, as at the end of the 1980s and the 1990s. The fact that the rate of career change for unemployed workers declines during recessions seems counterintuitive, but there are several possible explanations for this phenomenon. These explanations can be divided into two broad categories. The first focuses on why those unemployed during recessions are less likely to pursue a change in career. For example, Carrillo-Tudela and Visschers (2013) consider aggregate unemployment fluctuations based on unemployed workers’ decisions to change occupations. They argue that in recessions, two factors reduce the incentives for unemployed people to change careers. One, though their job opportunities in their old careers might have dried up during the recession, it is also harder to find jobs in the alternate careers that they consider pursuing. And two, workers take into account that they may be less likely to start a particularly successful career path during a recession, which further reduces their incentives to change careers. Read the full letter here .
  • HBR: Comparing Jobless Recoveries--Great Recession and Great Depression

    Justin Fox , editorial director of the Harvard Business Review Group , offers up a little perspective at the HBR blog. As bad as the post-Great-Recession jobless recovery has been--and Fox is not suggesting it been anything other than terrible--take a look at it in comparison to the Great Depression years: Fox writes: What lessons can one draw from this? Basically, if you think this downturn was comparable in origin and inherent severity to the other recessions since World War II, then we've been the victims of economic-policy bungling of epic proportions. If, on the other hand, you think the proper comparison is the Great Depression, the last U.S. downturn brought on by a severe financial crisis, you'd have to say the White House, Congress, and most of all the Federal Reserve have done an absolutely brilliant job relative to their early-1930s counterparts. I'd lean toward explanation No. 2 — we did actually learn something from the Great Depression, although probably not enough. Read One Difference Between a Great Recession and a Great Depression: Jobs here .
  • SF Fed's 'Economic In Person' Series: The Great Recession and Unemployment

    One key legacy of the Great Recession will be the damage it caused to the labor market, says Mary Daly . That damage is deep and wide. And it only just begins to show up in the stats discussed in the media. In the first installment of a new series from the Federal Reserve Bank of San Francisco , Daly--Associate Director of Research and Group Vice President at the bank--discusses four distinguishing characteristics of the recession and its impact on unemployment. frbsf on Broadcast Live Free
  • McKinsey Global Report on 'Job Creation and America's Future'

    The McKinsey Global Institute 's new report on job creation paints a grim picture of employment prospects in the US for the coming years. The authors write that in today's global economy "there is no more important economic priority than building a strong workforce." And they project a return to full employment will take longer than in previous recoveries. Much longer. Here is a look at their projection compared to past recessions: The US economy needs to find jobs for the millions who lost jobs since the start of the recession, and then it needs to provide sustained growth and "better matching of US workers to jobs" for there to be any hope of a return to full employment by the end of the decade. From the report: To return to prerecession employment levels by 2020 and accommodate the new entrants into the labor force, the United States will need to create 21 million net new jobs in this decade. To understand how this might be achieved, we created three scenarios of sector job growth, using our survey data, interviews with companies, and macroeconomic forecasts of sector demand. In the most optimistic scenario, 22.5 million new jobs could be created by 2020, returning the economy to a 5 percent rate of unemployment by 2018. However, in the low-job-growth scenario, only 9.3 million net new jobs are added—implying continued levels of high unemployment. In our midrange scenario, about 17 million jobs would be created, with the unemployment rate remaining at nearly 7 percent in 2020 (Exhibit E2). The low-job-growth scenario is frighteningly familiar. Essentially, it would be a continuation of the weak US job creation trend since 2000. It would mean further contraction in manufacturing employment, a continued wave of automation and offshoring in administrative and back-office positions, and a new wave of automation in retail (for instance, more widespread adoption of self-checkout). As in the past decade, our projections show that college graduates would fill a disproportionate share of whatever jobs would be created. Where the scenario would diverge from the past decade is in health care, in which large efficiency gains or significant cost controls unaccompanied by job-creating innovation could slow rates of job growth. Read the full report, An economy that works: Job creation and America’s future , here .