The Bureau of Labor Statistics (BLS) declared in April 2014 that the number of private-sector jobs in the United States has finally recovered to its 2008 peak six long years and an agonizingly slow four-year recovery. According to a 2013 analysis from the Congressional Research Service (CRS), unemployment was only 4.4 percent in October 2006, but had risen to 10% by 2009. It has recently reduced to 6.7 percent, but openings can still be difficult to come by. Many groups have been heavily impacted, ranging from veterans to recent college grads, and job searches for the long-term unemployed can drag on indefinitely.
The US economy is predicted to add 200,000 jobs every year, but those added will not necessarily be the same as those lost six years ago. The labor market in the United States has been significantly recomposed as a result of ongoing technical and economic transformation, including computerization and outsourcing. According to a 2013 study by Duke University and the University of British Columbia, middle-income occupations are rapidly vanishing during recessions.
“The Low-Wage Recovery: Industry Employment and Wages Four Years into the Recovery,” a 2014 analysis of BLS data by the National Employment Law Project (NELP), looks at the types of employment that were lost during the recession and those that have been added since the recovery began. The BLS’s Current Employment Statistics (CES) and Occupational Employment Statistics (OES) surveys provided the source data. The OES provided pay data, which is based on median estimates rather than averages, which can be skewed by higher-paid employment within certain industries.
- While the US economy has recovered to the number of private-sector jobs it had in 2008, the gains and losses have not been evenly distributed: 1 million jobs were lost in high-wage industries, whereas 1.8 million were added in low-wage industries. The effects of the recession vary widely, as indicated in the graph below, but overall, losses were greater in high-wage jobs and growth was stronger in low-wage jobs.
- Lower-wage industries were responsible for 22% of job losses during the recession, but 44% of job gains since the recovery began. During the recession, the lower-wage sector lost 2 million jobs, but has subsequently added 3.8 million.
- Food-service work, which pays the least of the low-paid jobs with a median hourly wage of $9.48, grew the most: While the recession resulted in the loss of 367,000 jobs, 1.2 million have been gained since then. Overall, the sector now employs 9% more people than it did before the recession.
- Health and education are two other low-wage growth industries: “This was the only industry to add jobs during both the downturn and the recovery, bringing employment nearly 13 percent higher than it was at the beginning of the recession.”
- Mid-wage industries accounted for 37% of job losses during the recession, but just 26% of new jobs since then. There are roughly one million fewer such employment presently than there were in 2008. Services provided by local governments were particularly heavily hit, and they have yet to fully recover.
- Higher-wage industries lost 41% of jobs during the recession, but only 30% of new jobs were created. 3.6 million jobs in higher-wage industries including accounting, legal work, and construction were lost during the recession; just 2.6 million jobs have been added since then.
- The high-wage professional, scientific, and technical services industries saw significant job growth through March 2014, adding more than 800,000 jobs occupations like accountants, legal professionals, software developers, and engineers. “While significant job growth in this higher-wage industry is a welcome trend, employment growth is nearly six percentage points lower than it was at a similar stage following the 2001 recession,” says the report.
- While there has been some recovery in construction, manufacturing, transportation, and related occupations, the recession losses were so large that they are only now returning to pre-recession levels construction employment is still 20% below its 2008 peak, for example, and food and textile manufacturing employment is still 11% below its pre-recession peak.
- “Over the last four years, private-sector increases have been somewhat offset by job losses in the public sector as a result of federal, state, and local budget cuts. During the recovery era, net employment losses totaled 627,000 across all levels of government. Education absorbed over three-quarters of the 378,000 net job losses over the last four years, which was particularly severe at the municipal level.”
- The job losses and gains in the 2001 and 2008 recessions were quite different: After the 2001 recession, 39 percent of the gains were in lower-wage industries, 20 percent in mid-wage industries, and 40 percent in higher-wage industries. Growth has been concentrated in low-wage and some mid-wage industries since the 2008 recession, but higher-wage growth has been significantly weaker.
In an interview with the New York Times, the study’s author, Michael Evangelist, said: “Fast food is driving the bulk of the job growth at the bottom end – the job gains there are just phenomenal.” If this is the case if these occupations are here to stay and will account for a significant portion of the economy the issue becomes, “How can we make them better?”
Recession, unemployment, inequality, financial crisis, jobless recovery, outsourcing, and computerization are some of the terms used to describe the situation.
Which occupations are most impacted by the recession?
8 industries with the best job security during a downturn
- Health-care services. People get sick and require medical care regardless of the state of the economy, thus the demand for health-care occupations is fairly stable, even during a downturn.
What types of occupations did people lose in 2008?
The cost of employment losses was felt in every industry. Between November and December, 101,000 construction jobs were lost, as well as 149,000 manufacturing positions. 67,000 jobs were lost in retail, while 113,000 were lost in professional and business services. Education and health services, which created 45,000 jobs in December, and government, which added 7,000 positions, were the only two areas of growth.
As home development halted in 2008, approximately 800,000 manufacturing jobs were lost and 630,000 construction jobs were lost. Jobs in the banking sector, publishing firms and trucking companies, retail stores and hotels have also become scarce.
Aside from increased unemployment, more Americans are working fewer hours or working part-time. In December, the number of persons working part-time increased to 8.3 million, up from 7.3 million a month earlier. In addition, the average length of a workweek for nonmanagement employees declined to 33.3 hours in December, down from 33.5 hours the previous month.
“Even with a stimulus package, unemployment will continue to rise, and by December, it will most likely go beyond 9%,” said David Levy, chairman of the Jerome Levy Forecasting Center. Obama suggested Thursday in an economic speech that the jobless rate “may reach double digits.”
The rapid employment losses more than one million jobs have vanished in only two months indicate that the recession will extend at least until early summer, making it the longest since the 1930s. The mid-1970s and early 1980s severe recessions each lasted 16 months, which is the current record.
Medical professional
Within the medical field, there are numerous vocations and specialties. This group includes Registered Nurses (RNs), pharmacists, physicians, surgeons, paramedics, dentists, dental assistants, and even veterinarians. People and animals become ill regardless of the economy, thus they will always require the assistance of trained professionals.
Specialized care, therapy, and counseling
Consider elder care, physical therapists, occupational therapy, substance-abuse counseling, chiropractic treatment, home health aides, mental health specialists, social workers, and other professionals who operate in this field. People place a high importance on their health. They will spend money on services that will help them to be productive while also being pain-free. Some of these services are covered by insurance, encouraging consumers to use them even when they are short on cash.
Law enforcement officers
The specific link between crime and economic cycles is difficult to pin down. Some crimes predict a downturn, while others coincide with it, and still others show no link at all. Communities prefer to invest in physical safety for local companies and citizens in any economic scenario, which means that police officers and the professionals who support them are in high demand even during a downturn.
Public utility services
During economic downturns, electric, water, sewage, waste, trash, and recycling services all continue to operate. Utility personnel, after all, are essential to ensuring public order and health. Surprisingly, consultants that serve those utilities appear to get the same benefit. Many cities, for example, are obligated to undertake annual audits of their trash-collection companies. Even in a down economy, consulting businesses that undertake such audits will have work to do.
Financial services
The importance of money mobility explains why financial specialists are always in demand. Accountants, auditors, actuaries, claims adjusters, tax preparers, and insurance underwriters are just a few of the employment available in the financial services industry. Many jobs necessitate professional certificates such as Enrolled Agent (EA), Certified Public Accountant (CPA), or Certified Financial Analyst (CFA) (Chartered Financial Analyst).
Education services
Economic booms come and go, but putting money for the future is always a good idea. Regardless of the economy, jobs in primary education, secondary school, higher education, special education, and adult education are in high demand. Those interested in following this path should be aware that the method education is given is changing. New types of distant and on-demand education are becoming more relevant in addition to traditional classroom educators. As a result, a teaching career might be flexible in terms of both location and delivery manner.
Looking for a job that is recession-proof? A skilled resume writer can reframe your experience in order to help you advance in your job.
What occupations are not affected by the recession?
A position in the medical industry, whether you’re a doctor, physician assistant, nurse, or radiographer, is an excellent location to work during a recession.
What is going on in the economy has no bearing on our physical or emotional wellness. Even in a downturn, people will become unwell. Appendixes will break, babies will be born, and accidents will occur.
If you want the most employment stability, a career at a hospital or clinic is a good option. People will get sick and injured, regardless of what happens in the stock market or with GDP growth. They will require medical attention. Many recession-proof occupations are available in the healthcare business.
In a recession, who suffers the most?
The retail, restaurant, and hotel industries aren’t the only ones that suffer during a recession. During periods like these, industries like automotive, oil and gas, sports, real estate, and many more face significant decreases. Although the recession brought on by the coronavirus epidemic is unusual, many of these businesses have had difficulties in the past.
However, as we already stated, not all is doom and gloom. Certain industries have done a good job of riding the wave and adapting.
Which industry is immune to the downturn?
A recession-proof business can be extremely profitable for people in both good and bad times. Whatever the state of the economy or the stock market, certain company concepts, such as those listed below, have a good possibility of succeeding despite the rest of the financial doom and gloom.
Many well-known or historically successful enterprises were founded during economic downturns. The Walt Disney Company was created in the late 1920s, at the commencement of the Great Depression, and the Hewlett and Packard electronics company was founded in the late 1930s, during the second recession.
Rising interest rates and shifting GDP pose far less of a threat to the finest recession-proof enterprises mentioned below than they do to most other businesses, with many of them having the ability to do even more business than usual.
Food and Beverage Business
Because everyone still needs food and drinks to live, the food and beverage business is one of the most recession-proof industries. Because it is not a luxury that can be put aside in difficult times, enterprises in this area can thrive even in a downturn.
What causes people to lose their jobs during a recession?
Let’s start with a basic understanding of what an economic recession is. “A considerable fall in activity extended across the economy, lasting more than a few months, observable in industrial production, employment, real income, and wholesale-retail trade,” according to the National Bureau of Economic Research, a non-profit, non-partisan research organization. Businesses lose money as all types of economic activity diminishes, forcing them to lay off staff. This is how a recession causes the unemployment rate to rise.
As previously stated, the recession-causes-unemployment link is more difficult in certain aspects. For example, an increase in unemployment might set off a downward spiral that worsens and prolongs a recession. Consumer spending declines when unemployment rises. As a result, economic activity and growth slow even more, resulting in additional layoffs and the creation of fewer jobs.
Beyond questions of causality, it’s vital to remember that the economy runs in cycles, with investment/growth, unemployment, and inflation all rising and falling in tandem. This cycle has four phases, as far as we can tell.
- Business activity is at an all-time high, with low unemployment and rising inflation.
- A recession begins with a dip in total output, higher unemployment, and lower inflation.
- The recession reaches its apex, the unemployment rate reaches its highest level, and inflation is at its lowest level.
- The economy begins to improve, unemployment begins to decline, and inflation begins to climb once more.
The Great Recession Unemployment Rate
While unemployment isn’t usually the cause of recessions, it is one of the ways we gauge the severity of the consequences of a downturn on people. The unemployment rate has a lot to do with our perception of the severity of the Great Recession, which was sparked by the global financial crisis of 2008. In October 2009, the unemployment rate during the Great Recession peaked at 10.0 percent. To put it another way, the highest unemployment rate since the Great Depression occurred during the Great Recession.
There has been a lot of research done to figure out which groups of people were the hardest hit by the Great Recession. Marianne Bitler and Hilary Hoynes, economists, wrote a seminal research in 2015 that looked at the consequences of the Great Recession and earlier recessions. They discovered that persons at the bottom of the income scale are disproportionately affected by recessions. These workers are usually the first to lose their jobs. Furthermore, these individuals are typically low-skilled, making it difficult for them to find alternative jobs.
Which industries are being impacted by the recession?
Healthcare, food, consumer staples, and basic transportation are examples of generally inelastic industries that can thrive during economic downturns. During a public health emergency, they may also benefit from being classified as critical industries.
What industries went bankrupt in 2008?
The number of people he has killed is staggering. Both Steven Spielberg and Jeffrey Katzenberg are said to have lost money from the trust. HSBC and the Royal Bank of Scotland did as well. Tufts University has written down a $20 million Madoff investment, while Yeshiva University has been named as another casualty. This is only the top of the iceberg. What a way to bring the year to a close.
Investment Banks’ Collapse
Bear Sterns, Lehman Brothers, and Merrill Lynch three of Wall Street’s most prestigious and largest investment banks that all failed in 2008 are perhaps the most telling indications of Wall Street’s death.
Bear Stearns was the first to go under. The firm was extensively invested in subprime mortgage investments and was severely indebted. In March, investors became concerned about the company’s health, and in a matter of days, they withdrew their funds, resulting in a significant liquidity crisis. J.P. Morgan Chase purchased Bear for just $10 a share when the federal government orchestrated a last-minute bailout. Its stock had been trading as high as $130 in the previous year.
The market was then dealt another devastating blow in September, when Lehman Brothers announced that it, too, could no longer operate and was seeking for Chapter 11 bankruptcy protection. It was the largest lawsuit ever filed in the United States.
Barclays bought Lehman’s North American operations, while Nomura bought its overseas holdings.
Merrill Lynch was the third Wall Street firm to go under, and it was quickly sold to Bank of America.
Gambling in a Crisis
This year, J.P. Morgan Chase and its CEO, James S. Dimon, were among the few Wall Street winners. The bank was a key player in the credit crisis, first taking over Bear Stearns in a government-backed deal and then buying out the majority of Washington Mutual after it was seized by federal authorities.
The company’s stock is down for the year, but so is everyone else’s, and only time will tell whether Dimon’s choices were wise. But, as of the end of 2008, he seemed to have come out on top.
Vegas’ Losing Streak
Casinos have been hit particularly hard as the recession has progressed, particularly those in Las Vegas, where customers arrive after either a long drive through the desert or a flight into town.
Sheldon Adelson, the CEO of Las Vegas Sands, is one of the greatest losers from the city’s losing run, having just invested $475 million of his own money to save the struggling company.
According to a study by Steven Hall & Partners, a compensation consulting firm in New York, the billionaire has lost at least $16.6 billion this year due to his Sands interests. Adelson’s outsized investment in the company, which he controls himself and through family trusts, is part of the reason for his large losses. Adelson owns about 70% of Sands, far more than other big-time, billionaire CEOs.
Academic Woes
The Ivy League and academics have felt the effects of Wall Street’s losses. Both Harvard and Yale, which are famed for their big, well-invested endowments, have been hit hard by the recession.
In the four months leading up to October, Yale’s endowment lost a quarter of its value. Since the end of June, Harvard has lost 22% of its value. Neither is expected to be completed quickly.
Battered Banks
This year, nearly two dozen banks have failed, prompting anxiety and panic among some customers and losses for those who had saved more than the FDIC maximum. IndyMac, Washington Mutual, Wachovia, and Countrywide were among the largest names to go bankrupt in 2008. Banks are gradually removing one brand and replacing it with the new parent company’s name and emblem, making Main Streets in America appear substantially different than they did a year ago.
Wal-Mart a Winner, but What About Next Year?
Wal-profits Mart’s increased 10% in the third quarter. Some of this might be attributed to bargain hunters, while others can be linked to buyers who took advantage of early Christmas bargains. However, not everything at the business is rosy: forecasts for next year are bleak, with the economy even affecting Wal-Mart locations around the world.
Taxpayer Questions
Depending on your point of view, US taxpayers were either large losers or big winners in 2008. The Troubled Assets Relief Program, or TARP, is a $700 billion bailout plan authorized by Congress. It was created with the intention of purchasing banks’ faulty mortgage assets, but it has since been utilized for a variety of rescues.
AIG, the world’s largest insurance company, received $40 billion from the TARP program. Most recently, the program provided a short-term loan to General Motors and Chrysler.
Many homeowners have inquired as to the status of their personal bailout, claiming that Washington has placed too much emphasis on Wall Street and corporate America.
Another group claims that when the economy improves, taxpayers will benefit because they acquired shares in all of the bailed-out corporations at a bargain.
Automakers on the Skids
GM, Chrysler, and Ford have all had a horrible year. First, record gas prices were imposed on the Big Three manufacturers. Americans have traded in their gas-guzzling SUVs and pickup trucks, the Big Three’s bread and butter, for smaller, more fuel-efficient automobiles.
Then, just as petrol costs began to plummet, consumer credit tightened, and many would-be automobile owners found themselves unable to obtain financing for their new vehicle. The Big Three have sought assistance from the government. At first, lawmakers and President Bush turned down the automakers, but GM and Chrysler, the two most vulnerable automakers, eventually received an emergency loan.
President-elect Barack Obama and the next Congress will ultimately decide the destiny of the Big Three.
However, American businesses are not alone. Even international automakers are suffering as a result of the crisis. Toyota stated on Monday that it expects to incur its first operating loss in more than 70 years.
Homeowners’ Nightmares
This year has been dubbed “the Year of Foreclosure.” According to RealtyTrac, one out of every 488 residences in the United States received a foreclosure notice in November. Many mortgages have been revised by banks, but it does not appear that these changes are working.
More than half of the mortgages amended in the first three months of this year were delinquent within six months, according to the Comptroller of the Currency, which oversees national banks. According to the Mortgage Bankers Association, nearly one out of every ten homeowners is late or in foreclosure.
Insurance Giant’s Collapse
When insurance giant American International Group, or AIG, was taken over by the government, many people lost money. The company’s stock plummeted in value in a matter of days.
Maurice “Hank” Greenberg, the CEO of AIG for 27 years, was one of the most affected.
Greenberg lost nearly 95 percent of his assets, which were valued at over $3 billion at the time, according to analysts. But don’t be too downhearted. Greenberg still had a private plane, an office on Park Avenue, and properties in New York City and Brewster, New York, at the time of AIG’s collapse, either personally or through the companies he runs.
During a recession, who benefits?
Question from the audience: Identify and explain economic variables that may be positively affected by the economic slowdown.
A recession is a time in which the economy grows at a negative rate. It’s a time of rising unemployment, lower salaries, and increased government debt. It usually results in financial costs.
- Companies that provide low-cost entertainment. Bookmakers and publicans are thought to do well during a recession because individuals want to ‘drink their sorrows away’ with little bets and becoming intoxicated. (However, research suggest that life expectancy increases during recessions, contradicting this old wives tale.) Demand for online-streaming and online entertainment is projected to increase during the 2020 Coronavirus recession.
- Companies that are suffering with bankruptcies and income loss. Pawnbrokers and companies that sell pay day loans, for example people in need of money turn to loan sharks.
- Companies that sell substandard goods. (items whose demand increases as income decreases) e.g. value goods, second-hand retailers, etc. Some businesses, such as supermarkets, will be unaffected by the recession. People will reduce their spending on luxuries, but not on food.
- Longer-term efficiency gains Some economists suggest that a recession can help the economy become more productive in the long run. A recession is a shock, and inefficient businesses may go out of business, but it also allows for the emergence of new businesses. It’s what Joseph Schumpeter dubbed “creative destruction” the idea that when some enterprises fail, new inventive businesses can emerge and develop.
- It’s worth noting that in a downturn, solid, efficient businesses can be put out of business due to cash difficulties and a temporary decline in revenue. It is not true that all businesses that close down are inefficient. Furthermore, the loss of enterprises entails the loss of experience and knowledge.
- Falling asset values can make purchasing a home more affordable. For first-time purchasers, this is a good option. It has the potential to aid in the reduction of wealth disparities.
- It is possible that one’s life expectancy will increase. According to studies from the Great Depression, life expectancy increased in areas where unemployment increased. This may seem counterintuitive, but the idea is that unemployed people will spend less money on alcohol and drugs, resulting in improved health. They may do fewer car trips and hence have a lower risk of being involved in fatal car accidents. NPR
The rate of inflation tends to reduce during a recession. Because unemployment rises, wage inflation is moderated. Firms also respond to decreased demand by lowering prices.
Those on fixed incomes or who have cash savings may profit from the decrease in inflation. It may also aid in the reduction of long-term inflationary pressures. For example, the 1980/81 recession helped to bring inflation down from 1970s highs.
After the Lawson boom and double-digit inflation, the 1991 Recession struck.
Efficiency increase?
It has been suggested that a recession encourages businesses to become more efficient or go out of business. A recession might hasten the ‘creative destruction’ process. Where inefficient businesses fail, efficient businesses thrive.
Covid Recession 2020
The Covid-19 epidemic was to blame for the terrible recession of 2020. Some industries were particularly heavily damaged by the recession (leisure, travel, tourism, bingo halls). However, several businesses benefited greatly from the Covid-recession. We shifted to online delivery when consumers stopped going to the high street and shopping malls. Online behemoths like Amazon saw a big boost in sales. For example, Amazon’s market capitalisation increased by $570 billion in the first seven months of 2020, owing to strong sales growth (Forbes).
Profitability hasn’t kept pace with Amazon’s surge in sales. Because necessities like toilet paper have a low profit margin, profit growth has been restrained. Amazon has taken the uncommon step of reducing demand at times. They also experienced additional costs as a result of Covid, such as paying for overtime and dealing with Covid outbreaks in their warehouses. However, due to increased demand for online streaming, Amazon saw fast development in its cloud computing networks. These are the more profitable areas of the business.
Apple, Google, and Facebook all had significant revenue and profit growth during an era when companies with a strong online presence benefited.
The current recession is unique in that there are more huge winners and losers than ever before. It all depends on how the virus’s dynamics effect the firm as well as aggregate demand.