Summary of The Lasting Effects of the Great Recession

Six Million Missing Workers and a New Economic Normal

The Hamilton Project,

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The Lasting Effects of the Great Recession summary
The metric for measuring US unemployment overlooks some six million people.

Rating

7 Overall

8 Importance

7 Innovation

7 Style

Recommendation

The Federal Reserve monitors the US jobless rate to gauge economic recovery, but that measure fails to account for the “six million missing workers” who have dropped out of the US workforce as a result of the recession. Ignoring this discrepancy implies “settling for a new normal.” Economists Michael Greenstone and Adam Looney have coined an innovative, provocative metric to calculate recovery that they call the “jobs gap”; alas, the US might not fill the gap until 2021. getAbstract recommends the thesis to all US economy-watchers.

In this summary, you will learn

  • Why the current way of measuring the US unemployment rate is flawed
  • How the Great Recession has led six million people to drop out of the labor market
  • Why ignoring important changes in population trends and labor force participation risks creating a “new normal” that distorts the true economic picture
 

Summary

Years after the Great Recession officially ended, America has not yet achieved a full economic recovery. The unemployment rate has fallen month by month since August 2012, but millions are still jobless, while the proportion of working Americans relative to the population as a whole has remained constant...
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About the Authors

Michael Greenstone is a professor of environmental economics at MIT. Adam Looney is a senior economics fellow at the Brookings Institution.


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