Unemployment Is Key Indicator That Recession Hasn't Ended
Report says recession ended in 2009, but unemployment rates tell a different story.
When Cheryl Burke drives down her neighborhood street in the afternoon she notices something out of place.
"You used to drive down my block after you dropped the kids off to school, you'd drive back down your block, the driveways were empty because everybody was at work," Burke said. "They're all full now."
When Burke isn't working at her full-time job as a service delivery project manager for an international computer and technology corporation, she volunteers as co-director for Bessie's Table of Des Plaines. Bessie's Table is a program offered by the First United Methodist Church, and serves dinner to those in need Monday nights in the basement of the church.
For Burke and others, the recession is ongoing, but a recent finding published by the National Bureau of Economic Research (NBER) said the recession that began in December 2007, ended in June 2009. Any further decline would be considered a new recession.
Burke grew up in Des Plaines, and has lived here for 45 years. When she started volunteering at Bessie's Table in 2007, during a typical dinner they would serve 60 to 70 people. Now that number is always more than 100, and volunteers serve up to 150 people. She said more families are coming than before, and the Des Plaines community was affected by the recession more than others.
"This is very much a working class community, and when people aren't working there is a big impact," Burke said. "And I know a lot of people are doing whatever job they can get. People who had normally been plumbers that aren't getting as much work, they're doing home repairs, auto repairs, whatever they can do. And a lot of people are just doing the stuff just as side work because they can't get a regular, decent job."
Des Plaines' unemployment rate was 10.1 percent in 2009, according to statistics published by the Illinois Department of Employment Security, an agency that collects unemployment taxes and distributes unemployment benefits. In 2007 that rate was 4.1 percent, according to a report produced by the city's finance department.
The NBER's report relies on a variety of measurements including GDP, GDI and employment statistics. The month identified as the low point in employment, or trough, often lags behind the month identified as the conclusion of a recession. For example, in 2001-03 the employment trough happened 21 months after the NBER trough. In 2009 the employment trough was six months after the NBER trough in June.
The report notes there is no fixed rule about how much emphasis is placed on the various indicators, but since there is a recurring gap between the two troughs, it suggests more weight is placed on statistics including GDP and GDI, and the employment rate is more of a secondary indicator.
For the Des Plaines community however, unemployment is a primary indication the effects of the recession remain.
Barbara Ryan, executive director for the Des Plaines Chamber of Commerce, said employment is a key recession indicator because while stock prices may go up, that does not always translate into a healthier economy.
"A company's stock may be doing better because they send everything over to China," Ryan said. "Now they're getting their product produced at a lower cost to them, so their bottom line improves. Does that improve anything here? For the stockholders of that company, yes. But for the thousand employees that were let go because XYZ-company decided to ship their production to China? It helped XYZ; it did not help our economy."
Ryan said according to the Chamber's budget as well as what she's hearing from members, the recession is not over.
"Employment drives everything," Ryan said. "If I am unemployed, number one I am putting a bigger drain on the government by collecting those benefits. If I'm unemployed can I afford to buy the goods that I could a year ago? Can I afford to go out to dinner, to go to a movie? All those things, and then all those industries are impacted by the fact that I'm out of work."
"Everybody is impacted because I am unemployed," she added. "And when you multiply the 'I' by the thousands of people out of work, now you have a real impact on our economy."
Burke said one positive aspect of the recession is that residents are banding together to help each other out. On her street unemployed and underemployed residents have helped each other with home repairs.
Another Des Plaines resident making a difference is Terri Marlega. She was laid off from her job as an administrative assistant for an electrical contractor in April of this year. Three weeks ago Marlega began volunteering on Tuesdays at the Self-Help Closet & Pantry of Des Plaines.
Marlega said indications for her that the recession was over would include a reduction in unemployment and a reduction in the number of people that needed food stamps.
"Look at stuff like that, and see if that's improving," Marlega said. "Then you'll know that the recession's improving, not just looking at corporate numbers because if that corporate money doesn't trickle down to help anybody, what good does it do? The corporate recession is over, not the human recession."
Marlega said she was struck by the number of families that need the food pantry, and was touched by how appreciative its clients are.
"One poor lady came in looking for underwear," Marlega said. "Can you imagine having to go look for used underwear? That broke my heart."
"It makes me sad, but then it makes me really happy when I'm there because people are so genuinely grateful for whatever you can give them."
Burke said whether the NBER says the recession ended or not doesn't mean much to the Des Plaines community.
"I'm not sure it matters if it was that recession or a different recession," Burke said. "And I'm not sure it matters how far down it went and how far it went back up because it hasn't made a difference in the regular working class community. It's just people need work, and people need help paying for things, and I don't think it matters which recession it is or how they classify it; there is still a great big fat recession going on."