the Great Recession and Unemployment

Fed’s Study Shows the Great Recession’s Impact on Unemployment

The average length of unemployment for American workers is longer than it was before the Great Recession of 2007-2009.

The Great Recession and Unemployment

Two Federal Reserve Bank of St. Louis researchers, Alexander Monge-Naranjo and Faisal Sohail, recently released this interesting research on unemployment in the United States.

Published on the Fed’s website, the research shows:

“The Great Recession (2007-09) led not only to much higher numbers of unemployed workers, but also, and more dramatically, to much longer spells of unemployment for the unemployed.”

Anyone experiencing (or will experience) unemployment is “likely to be long-term unemployed (LTU), for which the standard definition is a continuous unemployment spell of 26 weeks or longer.”

Though the recession ended 6 years ago, professionals experiencing long-term unemployment are still feeling its effects. More specifically, 2.1 million people, jobless for 26 weeks or more, have been affected by the U. S.’s longest economic crisis.

Some groups on the search for a job have been more affected than others. By looking at the table below, you’ll see the researchers show results for three periods: January 2005, January 2010, and January 2015 and divide the long-term unemployed into the following age groups:

  • 16 to 24
  • 25-44
  • 45-54
  • 55+
Age Group January 2005 January 2010 January 2015 Recovery Gap (%)
Young Workers (16-24) 0.16 0.28 0.20 29
Prime-Age Workers 0.24 0.45 0.35 48
25-44 0.19 0.43 0.33 73
45-54 0.27 0.46 0.37 37
Old Workers (55+) 0.25 0.53 0.41 60
All Workers 0.21 0.42 0.31 45

SOURCES: BLS, Haver Analytics and authors’ calculations.
NOTE: The columns show the share of long-term unemployed among the unemployed in January 2005, January 2010 and January 2015 by age groups. Column 4 is the percentage difference between shares in January 2015 and January 2005. Underlying data are seasonally adjusted. All numbers are rounded.

According to their findings, “the recession was particularly harsh for two groups of unemployed workers: those aged 25-44 and those 55 or older.” In other words, millennials and baby boomers have been the most vulnerable groups to joblessness.

The researchers write:

“Since the recession ended, the LTU rates for older and younger workers have stayed further above their prerecession rates than the rates of middle-aged workers.”

The “Recovery Gap” (presented in the last column) caught my attention immediately. For young workers between the ages of 25 and 44, those experiencing unemployment is 73% higher than before the Great Recession.


For older workers 55 and older, the “Recovery Gap” is 60%.

High numbers indeed.

While the unemployment rate has fallen by 0.7% since last year, “the median unemployment spell (of 26 weeks) has stubbornly remained high” when compared to the 12 week unemployment spell experienced between 1970 and 2007.

the Great Recession and Unemployment
Fed’s Study Shows the Great Recession’s Impact on Unemployment.
Snapwire Snaps Original Photo Courtesy of Chelsea Francis. Edited by Me.

Rise in Unemployment Post Great Recession

Before the Great Recession, long-term unemployment was a rarity. However, it’s a persistent problem nowadays.

It isn’t uncommon to see people unemployed for at least 6 months now.

And, long-term unemployment should be noted for the challenge it is to those experiencing it. In the words of Naranjo and Sohail:

“From the viewpoint of individual welfare, entering LTU can have lasting negative consequences for both young and old workers.”

So, if you think unemployment is bad, long-term unemployment is worse.

It has the ability to affect not only one’s career but overall well-being as well. In its Consequences of Long-Term Unemployment Research Report, the Urban Institute reported the following:

“Being out of work for six months or more is associated with lower well-being among the long-term unemployed, their families, and their communities. Each week out of work means more lost income. The long-term unemployed also tend to earn less once they found new jobs. They tend to be in poorer health…”


Altogether, this research proves: unemployment rose after the Great Recession; long-term unemployment is a real, trying experience for millions of people; and it doesn’t discriminate on the basis of age as young and old are affected.

Without a doubt, the last economic recession left many looking forward to full employment (no cyclical unemployment in the job market) in the U.S.

You can view more of the Fed’s research at the following link:

Alexander Monge-Naranjo and Faisal Sohail, The Composition of Long-Term Unemployment Is Changing Toward Older Workers │ Federal Reserve Bank of St. Louis

Disclaimer: This article contains outgoing links to the research and data of others on the following websites: the United States Department of Labor’s Bureau of Labor Statistics, the Urban Institute, and the Federal Reserve Bank of St. Louis.