Graduate College: Recession Won’t Acknowledge

  • Essay 1 response for PS 1000, Wayne State, Winter 2013.
  • Example of teaching/learning mechanism: compare your essay to mine.
  • Niche audience: rational choice, economics, distributive politics.

ARTICLE: Who Suffers During Recessions? By Hilary Hoynes, Douglas L. Miller, Jessamyn Schaller  The Journal of Economic Perspectives, Vol. 26, No. 3 (Summer 2012), pp. 27-47.

Who is most likely affected in a recession and who is least likely to be affected in a recession? Hoynes, Miller, and Schaller (2012) tackle this question via a time-series and regression analysis in unemployment as well as employment rates by accounting for recession statistics for race, gender, education, and age. The authors argue that this research is important because, “National statistics can obscure dramatic differences in the severity of the cyclical impacts for different groups” (27).

In order to understand how people are affected by the recession, Hoynes et al. provide the employment and unemployment numbers just before the recession hits. The employment statistics in 2007, (see Table 1) per groups, are: 48% with no high school degree are working, compared to 86% of college graduates. At the same time, 59% of black women are working, compared to 71% of white women. 89% of white men are working, 79% of Hispanic men are working, and 66% of black men are working. 81% of people between the ages of 25-44 are working, while only 33% of 16-19 year olds are working.

Unemployment rates also varied widely in 2007 (see Table 1). Black men had the highest unemployement rate at 9.1%, and white women (3.2%) and white men (3.6%) had the lowest unemployment rate. The 16-19 year olds had an unemployment rate of 14.4% (highest), while 25-44 years olds (3.7%) and 45-60 years olds (3.3%) held very low unemployment rates. Finally, college graduates had an unemployment rate of 1.6%, while people with less than a high school diploma had an unemployment rate of 10.1%.

Hoynes et al. (2012) find that the Great Recession of 2007-2009 was “deeper and longer” than the 1980s recession (28). The Great Recession most deeply affected men, black and Hispanic workers, youth, and low educated workers (28). The former groups were also most likely to be affected in the 1980s recession. And, the affected groups are part of an industry-occupation cycle—the former groups are the most likely employees to stop being hired when recession hits; also, let go from employment (28).

The research suggests that the more educated you are—the less you will be affected by the recessions. Also, Hispanics are more and more the group with less than a high school diploma, and given the high initial rate of unemployment (2007) for this group, it is likely that Hispanics will be more greatly affected in future recessions. To be sure, according to the regression analysis, “an increase of one percentage point in the state unemployment rate leads to almost a two percentage increase in unemployment for workers with less than a high school degree compared to less than half a percentage point increase for those with a college degree” (37).

Gender played a complicated role in the analysis. First, women experienced increases in employment during the 1980s recession, but decreases in the Great Recession (34). Second, the responsiveness of the unemployment rate (Figure 4) of black women “is more than double” white women’s responsiveness (38). Indeed, according to Figure 6, gender differences dominate race differences whereby the three least responsive groups are women (39). Hoynes et al. explains that women are more likely to be “added workers” (labor force increases in recessions), while men are more likely to be discouraged workers (labor force decreases in recessions).

In closing, recession cycles are more pronounced and wide for industry—construction and manufacturing—rather than service and government. Men, blacks, Hispanics, youth, and low education people are more likely to work in the recession cycle-prone industries. The evidence suggests that college students in PS 1000 should work hard and get good grades—and graduate. You will be much less likely to be affected by the next recession.

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