An Uneven Road and Then a Cliff: US Labor Markets Since 2000

The Great Recession of the past few years follows a complete economic cycle (2000-07) during which employment outcomes improved just barely for most Americans, while actually deteriorating for some. Hourly wages rose modestly but employment rates fell from their peaks in 2000, leading to overall earnings stagnation. Highly educated workers, those with the very highest earnings levels and women gained relatively more than others; less educated, male and/or younger workers fell behind, especially in the Midwest. During the Great Recession unemployment rates have risen most for younger, less-educated, and minority workers, especially men. Unemployment durations are very lengthy while labor market recovery is likely to be gradual. Policy responses should help unemployed workers during the short term, while raising worker skills and job quality in the longer term, and providing additional supports for those who will be forced to take low-wage jobs.