COVINGTON, Ind. —
Have you noticed the length of unemployment cycles is increasing?
In 1957, a major job loss of 4.4 percent recovered in only 24 months and the 1981 drop of 3.0 percent recovered in 27 months. Since then, a modest drop in employment of 1.5 percent in 1990 and in 2001 required 31 months and 45 months, respectively, before full employment returned. The current cycle started 63 months ago and only 2.3 percent of the 5.4 percent drop has been recovered.
One might speculate the longer unemployment cycles are caused by loss of our manufacturing base or a new willingness of the unemployed to remain unemployed; equally important reasons began after World War II.
World War II encouraged women to enter the work force and created a baby boom, surprisingly not mutually exclusive events. America’s economy has been feeding off these two events since.
In 1948, there were only 27 percent women in the work force, but by 1990, 45 percent of our workers were women. Clearly, replacing one family worker with two boosted the economic growth rate. This economic “booster” ended in 1990 with little change in percent women in the workplace since.
The same may be said of baby boomers, perhaps the greatest bunch of consumers known to mankind. This economic growth “booster” is about to become a Social Security and Medicare “buster.”
The current economic growth rate, like 1933-1940, is so small that, without deficit spending, it would be negative.
Are unemployment cycles, loss of post war stimuli and low economic growth suggesting a forthcoming return to the Depression?