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The Lasting Effects of the Great Recession
Report

The Lasting Effects of the Great Recession

Six Million Missing Workers and a New Economic Normal

Michael Greenstone and Adam Looney
The Hamilton Project, 2013
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Editorial Rating

7

Recommendation

The Federal Reserve monitors the US jobless rate to gauge economic recovery, but that measure fails to account for the “six million missing workers” who have dropped out of the US workforce as a result of the recession. Ignoring this discrepancy implies “settling for a new normal.” Economists Michael Greenstone and Adam Looney have coined an innovative, provocative metric to calculate recovery that they call the “jobs gap”; alas, the US might not fill the gap until 2021. getAbstract recommends the thesis to all US economy-watchers.

Take-Aways

  • The unemployment rate has fallen steadily since August 2012. Yet millions are still jobless, and the proportion of working Americans to the population as a whole has hardly changed.
  • Using the jobless rate to gauge economic recovery is inherently flawed; this metric calculates only the “extent to which those looking for work can find a job.”
  • It doesn’t consider that the labor force has declined by some six million workers since the onset of the recession.

About the Authors

Michael Greenstone is a professor of environmental economics at MIT. Adam Looney is a senior economics fellow at the Brookings Institution.

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