Recessions and Unemployment: Established In The 1930s

Many have heard about Black Tuesday; the day the stocks plummeted back on the 29th of October in the year 1929. Many Americans were thrown out onto the streets; jobless, hungry and scared. For all those out there that had been living life like that after many harsh and cruel years, President Roosevelt announced a reform program, which would eventually lead America out of its deepest economic crisis. Top economists now call this golden three-part deal "the 3 Rs" for Relief, Recovery and Reform. The plan provided "Relief" to the unemployed and poor, "Recovery" for the economy, and "Reform" for the financial system such that the US would come back stronger than ever. This deal at the time looked particularly optimistic to many officials because it seemed as if it could be the end of the dark era we now call the Great Depression. The only thing standing between the deal and help was merely Congress, who was pretty divided on the plan. Even though the plan eventually passed, it didn’t really do as much about unemployment as many had expected it would. Now flash to the present day. We all hear tons about how the US is in debt. Heck, right when I opened my first research source for this project, I found a side bar  recalculating the US debt every three seconds. The recession that began in the year 2008 has left problems that we're still dealing with today. So the main question being asked right now seems to be, "Is the current unemployment worse than that of the Great Depression?"

(1-15-13)

The Great Depression Unemployment

During the Great Depression, unemployment was high. Many employers tried to get as much work as possible from their employees for the lowest possible wage. Workers were upset with the speedup of assembly lines, working conditions and the lack of job security. Seeking strength in unity, they formed unions. Automobile workers organized the U.A.W. (United Automobile Workers of America) in 1935. General Motors would not recognize the U.A.W. as the workers’ bargaining representative. Hearing rumors that G.M. was moving work to factories where the union was not as strong, workers in Flint began a sit-down strike on December 30, 1936. The sit-down was an effective way to strike. When workers walked off the job and picketed a plant, management could bring in new workers to break the strike. If the workers stayed in the plant, management could not replace them with other workers. This photograph shows the broken windows at General Motors’ Flint Fisher Body Plant during the Flint sit-down strike of 1936-37.

World War I veterans block the steps of the Capital during the Bonus March, July 5, 1932 (Underwood and Underwood). In the summer of 1932, in the midst of the Great Depression, World War I veterans seeking early payment of a bonus scheduled for 1945 assembled in Washington to pressure Congress and the White House. Hoover resisted the demand for an early bonus. Veterans benefits took up 25% of the 1932 federal budget. Even so, as the Bonus Expeditionary Force swelled to 60,000 men, the president secretly ordered that its members be given tents, cots, army rations and medical care.

In July, the Senate rejected the bonus 62 to 18. Most of the protesters went home, aided by Hoover’s offer of free passage on the rails. Ten thousand remained behind, among them a hard core of Communists and other organizers. On the morning of July 28, forty protesters tried to reclaim an evacuated building in downtown Washington scheduled for demolition. The city’s police chief, Pellham Glassford, sympathetic to the marchers, was knocked down by a brick. Glassford’s assistant suffered a fractured skull. When rushed by a crowd, two other policemen opened fire. Two of the marchers were killed.

(The following blog can be found at 

http://blsciblogs.baruch.cuny.edu/his1005spring2011/tag/great-depression/

and was written by Modern American History on March 12th, 2011)

The Current Unemployment

The December U.S. jobs report offered little to cheer about. The country counted 155,000 new non-farm jobs in the last month of 2012, a rate of growth that echoed the average monthly job gain for the last year (about 153,000). Much of the early coverage was tinged with a sense of relief. The fiscal cliff noise did not deter hiring. The post-Sandy devastation in New York and New Jersey did not drag down the national numbers. The economy was finally showing “steady” growth.

But one step back from the monthly scoreboard-watching, the picture is not nearly as reassuring.

Measured against the trajectory of all other postwar recessions, the current downturn is deeper and longer—by an impressive margin—than any that preceded it. Before 1980, the job market never took longer than two years to return to its pre-recession levels. The recession of 1981 and 1990 pushed this out into the thirty month range. It took four years to struggle back to the surface after the 2001 recession. The current recession is over five years old and counting. If we continue to add jobs at the 2012 monthly rate, we will be underwater for about twenty-six more months.

But even this is not the best measure. Over the course of the recession, the potential labor force has grown as new workers have graduated college or high school, or immigrated to the United States. Our jobs deficit is equal to the number of jobs lost since the recession began plus the number of jobs we should have been adding to keep pace with the growth of the working-age population. That number, by the ongoing calculation of the Economic Policy Institute, is about 9 million. At current growth rates, it will take eight years to clear that deficit.

Finally, the raw jobs numbers are silent as to the quality of the jobs being added. We continue to lose public sector jobs, and while private sector wages inched up in December, that increase still lagged behind the inflation rate. “Recovery” job growth is concentrated in sectors marked by low wages and meager job-based benefits. The job numbers may be “steady,” but the recession is still very much with us. The jobs deficit is substantial. And the goods jobs deficit is even worse.

(The following blog can be found at 

http://www.dissentmagazine.org/blog/unemployment-numbers-the-long-view

and was written by Colin Gordon on January 4th, 2013)

Unemployment During the Great Depression Has Been Overstated and Current Unemployment Understated

The commonly-accepted unemployment figures for the Great Depression are overstated.

Specifically, government workers were counted as unemployed by Stanley Lebergott (the BLS economist who put together the most widely used numbers) … even though gainfully employed and receiving a pay check.

If we’re trying to compare current unemployment figures with the Great Depression, the calculations of economists such as Michael Darby are more accurate.

Here is a comparison of Lebergott and Darby’s unemployment figures:

Year	Lebergott	Darby
	1929	3.2%	3.2%
	1930	8.7%	8.7%
	1931	15.9%	15.3%
	1932	23.6%	22.9%
	1933	24.9%	20.6%
	1934	21.7%	16.0%
	1935	20.1%	14.2%
	1936	16.9%	9.9%
	1937	14.3%	9.1%
	1938	19.0%	12.5%
	1939	17.2%	11.3%
	1940	14.6%

We’ve Got Depression-Level Unemployment

Unemployment is currently underreported. Even government officials admit that their “adjustments” to unemployment figures are inaccurate during recessions.

In addition, the most widely-cited statistics use the Department of Labor’s Bureau of Labor Statistics’ “U-3″ methodology. But “U-6″ figures are more accurate, because they include people who would like full-time work, but can only find part-time work, or people who have given up looking for work altogether. U-6 is also is closer to the way unemployment was measured during the Great Depression than U-3

Current levels of unemployment are Depression-level numbers, especially when compared to Darby’s figures.

For example, economist John Williams puts current U-6 unemployment at 15.9%. That’s higher than 9 out of 12 years charted by Darby.

And there are certainly Depression-level statistics in some states. For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:

• California: 22.0

• Nevada: 23.7

• Michigan 20.3

• (and Los Angeles County has 24.1% unemployment, higher than any of the Depression years as reported by Darby)

(The following blog can be found at

http://www.washingtonsblog.com/2011/06/unemployment-during-the-great-depression-has-been-overstated-and-current-unemployment-understated-weve-now-got-depression-level-unemployment.html

and was written by WashingtonsBlog on June 3rd, 2011)

Unemployment Today vs. the Great Depression

The job market may be in its worst condition in decades, but the Great Depression was still much, much worse.

Two economists with the Federal Reserve Bank of Dallas recently put together a report called “A Historical Look at the Labor Market During Recessions.” It has some great graphs, including this rather scary one:

By December 2008, the authors write, the unemployment rate “had already surpassed the average of all post-World War II recessions — and it continued climbing through 2009.”

That Great Recession jobless trend sounds much less menacing, though, when you compare it with the Great Depression — and indeed, other interwar recessions.

Here’s another chart from the Dallas Fed report:

As you can see, the unemployment increases so far in this recession (purple line) have still been well below the average of those for all the interwar recessions (red line).

The unemployment numbers for the Great Depression and earlier are based on research by Stanley Lebergott and Michael R. Darby. The report offers some ways to put this data in better context, given how much the structure of the economy and the labor force has changed in the last century.

(The following blog can be found at 

http://economix.blogs.nytimes.com/2010/01/28/unemployment-today-vs-the-great-depression/

and was written by Catherine Rampell on January 28th, 2010)