The Great Recession led to large increases in unemployment, rising to a peak of 15.6 million persons (seasonally adjusted) in October 2009. Employment declined by more than 8 million between January 2008 and December 2009.
While the recession officially ended in July 2009, theunemployment rate remains high, at 7.5 percent in April 2013, several percentage points above thelow point prior to entering the Great Recession.In the wake of this sharp downturn, the share of persons living in poverty also increased.Official poverty increased by 2.6 percentage points, from 12.5 percent in 2007 to 15.1 percent in2010. During this three year period, the percent of children in poverty increased by 4 percentage points from 18 in 2007 to 22 in 2010. This co-movement of labor market opportunities, economicgrowth and poverty reflects patterns experienced over prior business cycles (Bitler and Hoynes 2010;Blank 1989, 1993; Blank and Blinder 1986; Blank and Card 1993; Cutler and Katz 1991; Freeman2001; Gunderson and Ziliak 2004; Hoynes et al., 2006; Meyer and Sullivan 2011).At the same time, overall expenditures suggest that the social safety net provided significantsupport to households affected by the Great Recession. In 2011, Food Stamp expenditures amountedto 72.8 billion dollars and more than one in seven people in the U.S. are receiving benefits from the program. Maximum duration of Unemployment Insurance benefits has been extended to up to 99weeks, far beyond the normal maximum of 26 weeks or even the Extended Benefit maximum of 52weeks in most states.
Additionally, much attention has been given to the “private” safety net,
particularly the response of living arrangements. Census figures show that more families are
“doubling up” and
more young adults are opting to live at home (Johnson 2011).Against this backdrop of the social and private safety nets, in this paper we examine therelationship between poverty and business cycles historically and test whether there has been asignificant change in this relationship during the Great Recession. We analyze both official poverty
All employment outcomes in this first paragraph are seasonally adjusted.