Article

March 2014

A cohort component analysis of the 2007–2009 recession

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 Table 2. Employment in 2007, percent change 2004–2007, and model-estimated employment in 2010, by age cohort
2007Percent change, 2004–20072010
AgeEmployment (in thousands)AgeModel-estimated employment (in thousands)

16–20

8,38353.4

19–23

12,858

21–25

14,78913.9

24–28

16,843

26–30

16,2065.5

29–33

17,092

31–35

15,2792.0

34–38

15,584

36–40

16,9242.4

39–43

17,334

41–45

17,8741.7

44–48

18,169

46–50

18,161-2.4

49–53

17,723

51–55

15,489-5.6

54–58

14,622

56–61

13,703-17.0

59–64

11,373

Source: Current Population Survey and authors' calculations.

Examining the effects of the recession. Model estimates of 2010 employment by age group were compared with actual survey employment from the CPS for the same age groups for each of the characteristics we examine. For instance, model-estimated employment of 24 to 28 year olds in 2010 was compared with survey-estimated employment of 24 to 28 year olds 2010. In addition, we compare the model-predicted estimates of 2010 employment and the survey estimates of 2010 employment with survey estimates of 2007 employment for the same age range to show how actual growth and decline compared with what the model predicted.

Modeled versus actual employment

Projected employment levels that were estimated using the model differed from actual survey estimates in several ways, as discussed below.

Total employment. In 2007, employment of people ages 19 to 64 was approximately136.5 million. On the basis of the cohort analysis of historical data, employment for this age group was predicted to increase by 4 percent to 141.6 million in 2010 had historical trends continued. However, employment actually fell by 5 percent to 130.1 million in 2010, a level that is 11.5 million less than the model predicted. This difference comprises both actual declines in employment and modeled employment growth between 2007 and 2010 that was never realized.

All age groups failed to reach their model-predicted employment growth between 2007 and 2010. Figure 1 shows the actual and model-predicted percentage change in employment between 2007 and 2010 for each age group that was analyzed. Only two age groups—workers ages 54 to 58 and ages 59 to 64—experienced employment growth. This growth is attributable to the movement of large numbers of baby boomers, generally considered to be people born between 1946 and 1964, into these age groups between 2007 and 2010. However, even though these older age groups experienced some employment growth, it was still well below the growth predicted by the cohort model; no age group was immune to the effects of the recession on employment.

When looking at the differences between actual and model-predicted percentage changes in employment for each age group, we found that younger workers fared worse than other age groups during the recession. The three age groups comprising workers between 19 and 33 years of age were the only age groups to have a difference of more than 10 percentage points between their actual and model-predicted percentage changes in employment between 2007 and 2010. Thus, even though workers ages 34 to 38 in 2010 experienced the largest absolute decline, younger workers ages 19 to 33 in 2010 were furthest from reaching their model-predicted level of employment.

Full-time and part-time employment. The cohort model predicted that full-time employment would increase by 5 percent between 2007 and 2010 for workers ages 19 to 64, but employment actually declined by 8 percent, a 13 percentage-point difference between the actual and modeled growth (see figure 2). Mirroring patterns seen in total employment, full-time employment across all age groups was lower than the model predicted in 2010. However, the differences between actual and modeled changes in full-time employment were actually larger than the differences in total employment. This is because large declines in full-time employment were mitigated by growth in part-time employment between 2007 and 2010: on the basis of the cohort model, part-time employment was predicted to remain flat between 2007 and 2010 but actually grew by 16 percent (see figure 3). In all age groups, part-time employment grew between 2007 and 2010 and was higher than the model predicted, even as full-time employment was lower than the model predicted in each age group (see figure 4). Similar to total employment, the most dramatic differences in full-time employment between actual and model-predicted employments were among younger age groups, while older workers came closest to their modeled employment levels.

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About the Author

Brian Roberts
roberts.brian@bls.gov

Brian Roberts is an economist in the Office of Occupational Statistics and Employment Projections, U.S. Bureau of Labor Statistics.

Dalton Terrell
terrell.dalton@bls.gov

Dalton Terrell is an economist in the Office of Occupational Statistics and Employment Projections, U.S. Bureau of Labor Statistics.