There are some great graphs in a Center on Budget and Policy Priorities article Chart Book: The Legacy of the Great Recession. Between December 2007 and June 2009, the United States went through its longest recession since the Great Depression . The charts in the article document the legacy of the Great Recession.
The charts — the numbers — make a strong case that financial stabilization and fiscal stimulus saved the U.S. economy from complete implosion. Two of the graphs interested me in particular. The first graph compares previous recessions.
Job Growth Took a Hit After the Great Recession
Look the relatively modest pace (the red line) of job growth in the first years of the 2009 recovery. This has kept the unemployment rate high long after the end of the Great Recession.
While more total jobs were lost in the 1982 recession, the Great Recession’s recovery took much longer to get back to lower rates. Other indicators like those discussed below suggest that the Great Recession resulted in permanent slack in the labor market. “Slack” is defined as those who are not working but want to and those who would like to be working full-time but can only find part-time jobs.
The Great Recession Stunted Wage Growth, Too
The second graph from the CBPP Chart Book that I found interesting shows the effects of the recession on average earnings:
As might be expected during an economic downturn wages went down, yet while the economy has been on the mend for the last seven years, there has been zero appreciable effect of the recovery on wages. Average hourly earnings have grown just 2 percent annually. The share of national income going to profits has increased relative to that going to wages.
The latest jobs report shows the legacy of the Great Recession in more recent context. American wages as a percentage of the economy over the last six decades have cratered. A recent graph from FiveThirtyEight shows the unfortunate “downside of the expanding pool of workers.”
In short, employers have no incentive to raise wages. The Great Recession has led to a decade of weak wage growth. And as FiveThirtyEight puts it, “many workers are still waiting on their long-delayed pay raises. They are no doubt hoping that the clock doesn’t run out on the recovery before they get them.”