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Job Creation and Destruction

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									Job Creation and Destruction
Jesse Rothstein
October 29, 2010

The Age of Obama and the Lessons of the 1930s
UC Berkeley Institute for Research on Labor and Employment
                                        Employment Change Since the Recession Began
                                101

                                100
Percent of initial employment




                                 99

                                 98

                                 97
                                                                                            1974-6
                                                                                            1980
                                 96
                                                                                            1981-3
                                 95                                                         1990-3
                                                                                            2001-4
                                 94                                                         2007-

                                 93
                                      1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45
                                                            Months since start
Source: Bureau of Labor Statistics
           Monthly Change in Total Nonfarm Employment (thousands)

           600

           400

           200

              0

          -200

          -400

          -600

          -800

        -1000
           2007 - Nov 2008 - May 2008 - Nov 2009 - May 2009 - Nov 2010 - May

                                          Year
Source: Bureau of Labor Statistics
          Q1: Is long-term unemployment a symptom of
          advanced “Amerisclerosis?”
          Unemployed 27 weeks or more as a share of all unemployed
          50
          45
          40
          35
Percent




          30
          25
          20
          15
          10
           5
           0
            1980            1985        1990     1995   2000   2005   2010
                                               Year
   Source: Bureau of Labor Statistics
                      New Hires and Long-Term Unemployment
                                                                                                            8
                     4.4




                                                                                                                Long-term unemployment (millions)
                                                                                                            7
                                                                                        6 months
                     4.2                 Hires rate (left axis)
                                                                                                            6
Hires rate (JOLTS)




                     4.0
                                                                                                            5

                     3.8
                                                                                                            4

                     3.6
                                                                                                            3

                     3.4                                                                                    2


                     3.2                 Long-term unemployment (right axis)                                1


                     3.0                                                                                    0
                       Jan-00   Jan-02               Jan-04                    Jan-06   Jan-08     Jan-10
Q2: How have the repeated extensions of
unemployment insurance benefits affected
the labor market?
 Traditional program: 26 weeks.
 Extended Benefits program:
    ◦ Predates this recession
    ◦ Up to 20 weeks in high-UE states
   Emergency Unemployment Compensation (EUC08)
    ◦ June 30, 2008: 13 extra weeks
    ◦ November 21, 2008: Up to 20 weeks in high-UE states.
    ◦ November 6, 2009: Up to 53 weeks – 99 weeks total.
   Maximum possible weeks: 26  46  59  66  99

								
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