February 2010 No.3
Go Home
Archive
Articles:
Vision 2020 Update: Economic Planning for
Southwestern Illinois
Clearing up Misunderstandings about Discouraged Workers
The Great Recession and Its Impact on the Illinois Labor Force
Illinois, like the rest of the nation, has suffered the effects of the worst economic recession in decades, with mounting job losses and rising unemployment. In fact, some have called the recession the “Great Recession” as it is considered by some to be the worst economic downturn since the Great Depression of the 1930s. To date, most of the analysis of the economy has been national in focus. However, this article will describe the impact
of the recession on the Illinois labor force, examining the differences in employment and unemployment status found among various demographic groups.
Technical note: The data cited in this article were taken from the Current Population Survey (CPS), a monthly survey of households conducted by the U.S. Census Bureau for the U.S. Bureau of Labor Statistics. This article references four-quarter moving averages from the CPS instead of monthly estimates. This approach was taken because estimates at the state level are subject to large, monthly changes due to non-economic reasons such as sampling error and seasonal patterns in the labor force. Also, the quarterly averages will be referred to in this discussion by the last quarter in the four-quarter period. For example, fourth quarter 2007 (20074) refl ects data for first quarter 2007 through fourth quarter 2007; fi rst quarter 2008 (20081) reflects data for second quarter 2007 through first quarter 2008; and so on.
Unemployment Trends
Men disproportionately affected by rising unemployment
The Illinois unemployment rate has grown steadily since the beginning of the recession in December 2007, rising from 5.1 percent
in fourth quarter 2007 to 10.0 percent in fourth quarter 2009. The unemployment rate for men reached double digits (from 5.6 to 11.1 percent), while women have seen their unemployment rate climb from 4.5 to 8.7 percent (see Chart 1). The higher unemployment rate for men is due to the fact that industries with the biggest job losses during the recession, such as construction and manufacturing, primarily employ men. For a detailed look at Illinois unemployment by sex, age and race, see Table 1.
Unemployment rate increases largest among blacks and Hispanics
Unemployment rates increased among all racial groups between fourth quarter 2007 and fourth quarter 2009, with blacks and Hispanics experiencing the largest gains and highest unemployment rates (see Chart 2).
The unemployment rate for whites more than doubled, rising from 4.4 to 9.0 percent; the unemployment rate for white men went from 4.9 to 9.9 percent. During the same period, the unemployment rate for blacks increased from 10.7 to 17.1 percent. Black men saw their unemployment rate climb from 13.1 to 20.2 percent, while the unemployment rate for black women increased from 8.7 percent to 14.6 percent. The unemployment rate for Hispanics rose from 5.6 to 11.6 percent with Hispanic women reporting an increase of 7.9 points (from 5.0 to 12.9 percent).
Unemployment rates up for all age groups, but highest among younger workers
We can usually fi nd an inverse relationship between age and unemployment, with unemployment rates declining with age. However, during the current recession both younger and older workers, alike, have struggled to fi nd work (see Chart 3). The unemployment rates for most age groups doubled or nearly doubled between fourth quarter 2007 and fourth quarter 2009. The biggest unemployment rate increases were found among those ages 16-19 (+9.1 points) and ages 20-24 (+8.6 points). The youngest members of the labor force typically report the highest unemployment rates as a result
of limited educational attainment and job experience. The smallest unemployment rate gains were found among those ages 55-64 (+4.3 points) and 65 and older (+1.6 points).
Large gender and racial differences in unemployment also found among youth
The youngest members of the labor force (ages 16-19) reported not only the highest unemployment rates but also large differences between genders and among racial groups, similar to patterns found with older age groups. For example, while the overall unemployment rate for youth (ages 16-19) exceeded 25 percent in fourth quarter 2009, nearly one-third of male youth were unemployed and about one in five female youth were unemployed (see Chart 4). Also, about one-half of black youth and one-quarter of Hispanic youth were unemployed during fourth quarter 2009 (see Chart 5).
Employment Trends
The number of employed Illinois residents has fallen sharply since the beginning of the recession. However, in this discussion, we will focus on changes in the percentage of the working-age population (age 16 and older) that was employed (or employmentpopulation ratios) and not changes in the actual number of employed. One benefi t of using employment-population ratios is that they facilitate comparisons across time and among demographic groups of varying sizes. A decrease in the percentage of working-age population employed is usually the result of increasing job losses as well as workers ending their job search and dropping out of the labor force.
Employment declines for men exceed those for women
The percentage of total working-age population employed declined 4.4 points or from 64.5 in fourth quarter 2007 to 60.1 in fourth quarter 2009. Men experienced a larger employment decrease (71.0 percent to 65.2 percent) as compared to women (58.4 percent to 55.3 percent) – see Chart 6. As mentioned earlier, industries with large proportions of employed men were especially hard hit during this recession. For a detailed view of the employment status of Illinois’ civilian population by race, age and gender, see Table 2.
Younger workers experienced greatest employment losses
The largest decreases in employment for men were found among the youngest workers, including those ages 16-19 (-10.5 points) and ages 20-24 (-9.6 points) – see Chart 7 (on next page). Men ages 65 and older actually saw a small increase in the percentage employed (+1.9 points). Younger women also saw relatively large employment declines between fourth quarter 2007 and fourth quarter 2009 but the decreases were generally smaller or about the same as their male counterparts (see Chart 8). Women ages 16-19 reported a decline of 5.1 points and women ages 20-24 saw their employment population ratio fall 9.8 points.
Employment declines for whites and blacks almost same
Among racial groups, the decline in percentage of the working-age population employed through fourth quarter 2009 was about the same for whites (4.5) and blacks (-4.8) – see Chart 9. However, only about half of the black working-age population was employed as of fourth quarter 2009. Hispanics continued to report the highest employment-population ratios and reported the smallest decrease since fourth quarter 2007 (-3.2 points); however, since a peak of 69.7 percent in third quarter 2008, the Hispanic employment-population ratio has fallen 5.7 points.
More workers limited to part-time employment
Although the number of employed has fallen since the beginning of the recession, there has been a signifi cant increase in part-time employment for economic reasons. These include individuals who would prefer to work full time but are limited to working less than 35 hours per week as a result of economic circumstances. This group includes workers who saw their weekly hours reduced due to furloughs as well as individuals who accepted
part-time employment but would have preferred full-time jobs.
Part-time employment for economic reasons has more than doubled since fourth quarter 2007, while total employed has dropped by about 6 percent. Chart 10 tracks the change in total and part-time employment for economic reasons as a percentage of employment in fourth quarter 2007. Also, see Table 3 for a detailed look at the full-and part-time status of the Illinois civilian population by sex, age and race.
The percentage of total employed that worked part time for economic reasons was about 3 percent in fourth quarter 2007; by fourth quarter 2009, this percentage had more than doubled to 6.5 percent (see Chart 11). The increase in part-time employment for economic reasons was greater for men (3.0 to 6.8 percent) as compared to women (2.7 to 6.1 percent). The largest rise in part-time employment for economic reasons was found among Hispanics, who saw their percentage climb from 3.4 percent to 10.9 percent between fourth quarter 2007 and fourth quarter 2009. The percentage of youth (ages 16-19) employed part time for economic reasons increased 3.8 points to 9.2 percent as of fourth quarter 2009.
Duration of Unemployment
Duration of unemployment for men steadily rises; job searches longest for minorities
The length of time required to fi nd work has predictably increased with more unemployed competing for fewer jobs. The average duration of unemployment went from 19.3 weeks in fourth quarter 2007 to 25.8 weeks in fourth quarter 2009. Throughout most of the current economic downturn, women have experienced longer job searches as compared to men. However, the weekly duration of unemployment for men has steadily climbed and, as of fourth quarter 2009, was higher than the weekly duration of unemployment for women. See Table 4. Among racial groups, the highest weekly durations during fourth quarter 2009 were found among blacks (28.6) and Hispanics (26.0) – see charts 12 and 13. Youth had the lowest average weekly duration of unemployment (22.1); however, they also reported among the largest increases in unemployment duration since fourth quarter
2007 (+9.7 weeks).
Long-term unemployment highest among blacks and women Long-term unemployment (including those out of work for more than 26 weeks) rose
from 22.6 percent in fourth quarter 2007 to more than one-third (35.5 percent) of all unemployed as of fourth quarter 2009. The percentage of long-term unemployment was highest among blacks (41.4) and women (36.3) in fourth quarter 2009 – see charts 14 and 15. The percentage of unemployed out of work for one year or longer went from 13.3 percent in fourth quarter 2007 to 18.4 percent in fourth quarter 2009.
Conclusion
The data presented in this article confirm what most analysts have been describing since the recession began in December 2007: The effects of job losses and rising unemployment have been felt throughout the labor force and are not isolated to particular groups of workers. Men have reported higher unemployment rates compared to women during the recession; but women have had longer job searches as compared to men. The youngest members
of the labor force continue to have higher unemployment rates and have also experienced larger employment declines as compared to older workers. Unemployment rates and the average weekly duration of unemployment remain higher for racial minorities. Finally, unemployed workers have had to increasingly rely on part-time jobs as full-time employment opportunities have diminished. We will not be able to fully understand the impact of the
current economic downturn and its severity in comparison to previous recessions until more economic data become available from the Current Population Survey and other sources.
Rich Reinhold is manager of IDES’ Local Area Unemployment Statistics program.