Since 1970, the U.S. economy has suffered six recessions with an average length of 12.3 months. Compared to the other five economic downturns, the latest recession, which began in December 2007, was the longest at 19 months and the most severe with 7.2 million jobs lost, or almost three times the historical average. Furthermore, except for the recession of 2001, the job gains from the 2009-10 rebound have been the weakest since 1970 with only 72,000 jobs added.
Since 1970, there has been a clear pattern with more recent recoveries producing fewer jobs, higher unemployment rates, and less wage growth. What accounts for this? It has mostly to do with globalization and technology, which have battered less educated workers. Once the recession begins, companies slash payrolls deeply, especially for the less educated, and when the upturn begins, they find that they can increase output much faster than they are required to increase payrolls. For example, unemployment rates for December 2010 were15.7% for those without a high school diploma, 9.8% for those with a high school diploma, and 4.6% for the college educated.
Compared to every other post-1970 rebound, the 2009-10 recovery has generated profit and stock price growth exceeding any other, and produced the slowest pace of wage expansion. Data show that globalization and technology have tilted the economic playing field toward capital and away from wages, at least for those less educated. The lesson is clear: don't drop out of school and risk becoming a Third World wage earner in a First World economy.