Since the current recession began in 2008 there has been a lot of talk about how the current unemployment rate compares with historical unemployment rates.
To put things in context, below is a graph that show the United States unemployment rate back to the 1940s (i.e. post-Depression era).
As the chart demonstrates, we are currently experiencing the highest unemployment rate since the early 1980s. Back then, the national unemployment rate peaked at 10.8% in November and December of 1982. When you dive into the data on the state and city levels, there are more interesting statistics that emerge:
West Virginia experienced the highest unemployment rate among all 50 states during the 1980s, peaking at over 18% in March of 1983.
South Dakota witnessed the lowest levels of unemployment compared with the other 49 states, reaching a level of only 5.9% during October of 1982.
Certain metropolitan areas have been hit particularly hard during the current recession. Fresno, California is a prime example, with a stated unemployment rate above 29%
If you’d like to see a quick graph of the historical unemployment rates in your state or county, check out Google Public Data. This graph shows Los Angeles county, and can be compared with other counties, states, or even the United States as a whole.
Economists love the notion of “frictional unemployment.” Some may go as far as to say that all unemployment is frictional – meaning a mismatch in the supply land demand for labor.
One definition (courtesy of BusinessDictionary.com) describes frictional unemployment as follows: “Temporary unemployment arising out of the inevitable time lags in the functioning of labor markets, such as the time taken in moving from one job to another.”
Said another way, if you are out of work and looking for a new job, an economist might classify you as unemployed due to the “friction” in the economy.
Here’s an example: if you worked for an automobile manufacturer in Michigan, and your job was replaced by a worker at a facility in Korea, your unemployment could be considered frictional, as you would be looking for another opportunity to work with the skills you have or learn additional skills that would allow you to pursue a different type of job.
While logically sound, I have trouble the idea of frictional unemployment because it is too theoretical. It is easy for an economist to pontificate about the state of unemployment, but it is much more difficult when you are a personal victim of the “friction.”
Take a look at the short video below by Latoya Egwuekwe. It is an excellent compilation of county-level unemployment data over the course of the recession. [Note: There is no audio.]
There are currently over 15 million people unemployed. When you take into account everyone else who is underemployed, involuntarily working part-time, or who have given up looking for work, the number jumps to over 30 million!
