Historical Perspective on the November 2008 US Job Losses

Note: I’ve updated this article with more current information.

Well, that’s not good. The Department of Labor announced that there are 533,000 fewer US jobs in November than in October, which is the largest one-month drop since December of 1974, when the job numbers dropped by some 602,000.

The BusinessWeek article offers this perspective:

How bad are these numbers? Worse than in the 1990-91 recession, whose worst month saw 306,000 lost jobs, or the 2001 recession, whose worst month was a loss of 325,000 jobs. The U.S. economy lost 431,000 jobs in May 1980, which was the worst month of the back-to-back recessions of 1980-82. If it’s any comfort, though, November’s showing was better than the recession month of December 1974, when the economy lost a staggering 602,000 jobs, according to the Bureau of Labor Statistics.

I don’t think that’s true. We’re not as bad off yet as during the 2001 recession, and we’re on par with the 1990-91 recession. Sure, this is a terrible month, but how bad have the last few months been compared to other similar runs of job losses? What if you look at job losses as a percentage of the total number of jobs? To answer those questions, I downloaded seasonally-adjusted non-farm payroll employment data from the Department of Labor’s Bureau of Labor Statistics, which is where the 533,000 job loss number came from, and did some number crunching. Feel free to check my work as I go.

One other thing, though: statistics are cold comfort to those who have lost their jobs. I’m going to argue that, percentage-wise, this run of job losses isn’t that bad when compared historically. And yet, 533,000 is a lot of people. It’s equivalent to the entire town where I was born losing their jobs 50 times over. It’s everyone who lives in the Huntsville and Decatur, AL area, including me. Don’t lose sight of the people behind the numbers.

Historical Job Losses

What do job gains and losses from 1960 until now look like?

Monthly change in the number of jobs as a function of time from 1960 to 2006

The graph shows that November’s drop is the largest next to December 1974, as well as our continuing slide this year. May 1980 and October 1970 come next in the one-month-loss list. (But September 1983 kicked ass, adding over a million new jobs.) Now let’s look at the top ten greatest monthly losses.

Year Month Difference
1974 Dec -602,000
2008 Nov -533,000
1980 May -431,000
1970 Oct -430,000
2008 Sep -403,000
1975 Feb -378,000
1974 Nov -368,000
1975 Jan -360,000
1982 Jul -343,000
1960 May -340,000

November was bad, but so was September — it comes in at #5 on this top-ten list.

But what happens if you look at job loss as a percentage of the jobs that could be lost? That is, if you take the number of jobs lost in a given month and divide that number by the jobs you started out with in the previous month, does that change things?

Percent change in number of US jobs from 1960 to 2008

The shape of the graph is about the same, but the fluctuations are now larger earlier in time. The US economy has grown tremendously since 1960. The number of jobs went from about 54 million in January 1960 to 136 million in November 2008. Think of it as job inflation. Any single job doesn’t make as much of a difference to the total now as it did in 1960.

Our top ten list changes noticeably.

Year Month Difference % Diff
1974 Dec -602,000 -0.77%
1960 May -340,000 -0.62%
1970 Oct -430,000 -0.61%
1975 Feb -378,000 -0.49%
1980 May -431,000 -0.47%
1974 Nov -368,000 -0.47%
1975 Jan -360,000 -0.46%
1960 Dec -219,000 -0.41%
2008 Nov -533,000 -0.39%
1982 Jul -343,000 -0.38%

All of a sudden, November 2008 drops to 9th place, and September 2008 is gone from the list. December 1960 has taken its place.

But these are still all one-month drops, and the data shows a lot of single-month drops that are surrounded by gains. How does 2008 compare to other runs of job losses? Between 1960 and now there have been seven times that we’ve lost jobs for four or more months in a row.

Period Months Difference
Aug 1981 – Dec 1982 17 -2,838,000
Mar 2001 – May 2002 15 -2,202,000
Nov 1974 – Apr 1975 6 -2,164,000
Jan 2008 – Nov 2008 11 -1,911,000
Jul 1990 – May 1991 11 -1,621,000
May 1960 – Feb 1961 10 -1,256,000
Apr 1980 – Jul 1980 4 -1,159,000

The current run of job losses started back in January 2008. We haven’t yet lost as many jobs as we did from November 1974 to April 1975, and those job losses happened in half the time as our current ones. The August 1981 to December 1982 run holds the top spot. Based on this list, we’re barely worse off than the 1990-91 recession, and much better off than the 2001 recession. What about job losses as a percentage of the number of jobs that existed before the losses?

Period Months Difference % Diff
Aug 1981 – Dec 1982 17 -2,838,000 -3.10%
Nov 1974 – Apr 1975 6 -2,164,000 -2.75%
May 1960 – Feb 1961 10 -1,256,000 -2.29%
Mar 2001 – May 2002 15 -2,202,000 -1.66%
Jul 1990 – May 1991 11 -1,621,000 -1.48%
Jan 2008 – Nov 2008 11 -1,911,000 -1.38%
Apr 1980 – Jul 1980 4 -1,159,000 -1.27%

Percentage-wise, our current run doesn’t look that bad. The early 1980s recession was harsh, and these numbers bear out how bad it was. The 1974-1975 recession was also bad, again as is shown by the percent of jobs lost. But even the 1990-91 recession was worse.

So, yeah, November’s one-month drop worries me, but it’s not as bad as other historical losses. Of course, the US economy is still headed down. While we’ve experienced worse recessions, given another four or five months of this and we could move into the top spot across the board.

Where I Got My Data

All of my data are from the US Bureau of Labor Statistics, specifically their data page. Under their “Employment, Hours, and Earnings – National” database I searched for “All Employees, Thousands” under the “Total Nonfarm” super sector. All data were seasonally adjusted. You can get a graph like my first one directly from the Bureau of Labor Statistics.

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10 Comments

  1. on December 5, 2008 at 1:52 pm | Permalink

    Thanks for running the numbers on this, Stephen, and also providing perspective.

  2. on December 6, 2008 at 8:08 am | Permalink

    That’s nice work, Stephen, thanks for putting this together.

  3. on December 6, 2008 at 9:59 am | Permalink

    I note that you are taking numbers from a government bureau which is notorious for jiggling the statistics to sway public opinion. Unemployment measurements are made differently now than they were in 1980, as they included people whose benefits had run out and were no longer seeking work in 1980, and today they do not. Very difficult to trust a bureaucracy which manipulates ststisitics in such a manner.

    Second, I see that you are dealing with numbers that are “seasonally adjusted” but are comparing periods of Nov-Apr with Mar-May. How can you compare absolute numbers for different season when they are “seasonally adjusted?”

  4. kat
    on December 6, 2008 at 10:57 am | Permalink

    This was a good post, Stephen. All too often, we look at numbers like this and freak out without putting them into perspective. I’m glad to know you put some thought into it and posted something like this. You’re right, also, that we can’t forget that there are still a lot of people without jobs right now.

  5. on December 6, 2008 at 11:54 am | Permalink

    Bill H,

    While the unemployment numbers are counted differently (and there are a multitude of unemployment measures such as U3 to choose from), the number of payroll jobs is, as far as I know, reported the same across the entire time period. I linked to what they mean by seasonal adjustment at the bottom of the post. And seasonal adjustment doesn’t prevent me from comparing numbers across different months.

  6. Phi.Sanders
    on December 12, 2008 at 8:33 am | Permalink

    You stated early on that these were non-farm jobs, and then talked about how much growth (in number of jobs) has occurred since 1960 as your premise for this being of lower impact than previous losses.

    In that same time frame our country has seen a large shift from agrarian lifestyles (live or work on a farm) towards industrial (jobs), so while the statistics show it as being of lower importance as a percentage of jobs, I intuitively believe it may be more relevant.

    It seems to me that because there are less people who live or work on farms than in 1960, it would make the recent losses more relevant as a chunk of the overall economy and culture.

  7. on December 14, 2008 at 5:00 pm | Permalink

    That’s an interesting point. I’d want to see the number of farm jobs over that time, as well as their percentage of the total jobs available before I made any guesses one way or the other.

  8. GoodNumbers
    on December 18, 2008 at 8:15 pm | Permalink

    To Phi.Sanders comment on the shift from farm to non-farm jobs. To make a statistical difference, you would have to go back into the 40’s to see a significant shift from farm to non-farm. By 1960 most of the shift had already been made from farm to factory and office work. To some youngsters, 1960 was somewhere immediately following the Civil War!

  9. Andre
    on February 6, 2009 at 11:34 am | Permalink

    Excellent statistics.

    Let’s see how the current recession is doing now.. We now have data for Dec 08 and Jan 09.

    Total job losses for the now 13 month recession is: 3.6 Million

    Stephen, can you update your charts and see where our current recession ranks with the latest data?

    – Andre

  10. on February 6, 2009 at 3:10 pm | Permalink

    Andre: done. See the link at the top of this article.

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