The Center's work on 'Recession and Recovery' Issues

The Center examines the impact of changes in the economy on federal and state budgets, as well as the likely effectiveness of economic stimulus proposals. We also examine trends in employment and promote reforms to strengthen the unemployment insurance system.


State and Local Jobs Fell in January

February 6, 2015 at 4:14 pm

While today’s jobs report shows that the economy added jobs at a healthy pace in January, job growth could have been even stronger if states and localities hadn’t cut 4,000 positions.

About a third of the lost jobs were for teachers and others working in K-12 schools, preliminary data suggest.  The rest were non-education jobs at the state level, a category that includes state police, public health employees, and child protective workers.

The January job losses further slowed the already very weak recovery for state and local government jobs.  Over the last six months, states and localities have added jobs at a pace that’s only one-eighth the pace of total job growth nationally.  Part of the problem is recent tax cuts in states like Kansas, North Carolina, Wisconsin, which make it harder for a state to maintain public services.

Despite a modest improvement since bottoming out in mid-2013, state and local government jobs are still down 635,000 from their August 2008 peak.  (See chart.)  Nationally, the number of jobs returned to pre-recession levels last spring, but states and localities have added back less than one-fifth of the jobs they cut after the recession took hold.

Today’s Jobs Report in Pictures

February 6, 2015 at 10:16 am

Today’s strong jobs report shows continuing labor market improvement but also continuing significant “slack” — people who are not working but want to be, or people who want to work full time but can only find part-time jobs.  Prominent among those struggling to find work are the roughly three-in-ten jobless workers who’ve been looking for a job for 27 weeks or longer.

Click here for my statement with further analysis.






The Unconvincing Claim That Unemployment Benefits Hurt Jobs

January 30, 2015 at 2:31 pm

Many conservatives, including the Wall Street Journal editorial page and House Ways and Means Chairman Paul Ryan, are touting new research claiming that the expiration of emergency federal unemployment insurance (UI) benefits at the end of 2013 led employers to create 1.8 million additional jobs in 2014.  The same researchers previously claimed that the existence of emergency federal jobless benefits explained most of the persistence of high unemployment in the recovery from the Great Recession.

These findings merit considerable skepticism.

Let’s start with the 1.8 million net new jobs.  The implication is that if lawmakers had renewed federal UI for 2014 instead of letting it expire, employers would have added fewer than 1.2 million jobs to their payrolls in 2014 instead of the nearly 3 million they did add.  That would have been about half the 2.3 million jobs added in 2013 (see chart); it’s also well below the pace earlier in the recovery in 2011 and 2012, when many more people were receiving federal UI benefits.  It’s hard to believe that continuing federal UI at 2013 levels would have so completely derailed the jobs recovery in 2014.

Dean Baker offers a further reason to doubt this finding.  It falls apart when one uses a different dataset that’s arguably superior for estimating job growth.

The study takes advantage of the fact that the maximum number of weeks of federal UI available in a state in 2013 depended on the state’s unemployment rate to infer the employment effect of losing more versus fewer weeks of benefits in 2014 after federal UI ended.  It relies on state and local data from the Labor Department’s Bureau of Labor Statistics (BLS), whose concepts and definitions BLS says “come from the Current Population Survey (CPS), the household survey that is the official measure of the labor force for the nation.”  Those data are necessary for examining unemployment and labor force participation, but labor market analysts usually rely on the BLS survey of employers when evaluating trends in job creation.

To illustrate their findings, the researchers divide states into two groups: those that lost a large number of weeks of federal UI and those that lost a smaller number.  They find that employment accelerated more in 2014 in the former than in the latter, implying that additional weeks of federal UI were a drag on job creation.

Baker did the same comparison using the survey of employers and found the opposite.  Job growth after the federal program expired was faster in the group of states that lost a smaller number of weeks.

The fact that using employer-based data reverses the key finding that UI kills jobs is hardly a testament to the claim’s robustness.

To be sure, the researchers’ conclusions on how UI affects job creation rest on more sophisticated analysis than the simple comparisons described here.  But, as I’ll explain in a follow-up post, their research has met with considerable skepticism from other labor market experts.  And the prevailing wisdom that any adverse employment effects from UI are small continues to, well, prevail.

School Jobs Up in December But Still Far From Recovered

January 9, 2015 at 2:17 pm


Local school districts added 2,000 jobs for teachers, principals, and other employees in December, today’s jobs report shows, continuing schools’ painfully slow recovery from the recession.

Yet schools still have a long way to go before they leave the recession behind.  School districts nationally employ 268,000 fewer workers than in the fall of 2008, the first full school year after the recession started — even as the number of students has risen by about 485,000. (See chart.)

Strong schools are a crucial building block of a healthy economy, and states and localities should make the investments necessary to rebuild and strengthen them.  Last month’s modest gain is good news but far from what’s needed.

Today’s Jobs Report in Pictures

January 9, 2015 at 9:54 am

Today’s jobs report shows a labor market that strengthened significantly in 2014, but one that still bears scars from the Great Recession and subsequent federal budget cuts and other austerity policies that perpetuated a severe jobs slump even as the economy and business profits began to recover.

Employers added an average of 246,000 jobs a month in 2014 and unemployment fell below 6 percent.  At the same time, too many people who want a job haven’t found one, especially among the long-term unemployed.

Click here for my statement with further analysis.