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Utah data reveal unprecedented depths of recession job losses
Youthful workers who stopped looking masked magnitude of unemployment.

By Paul Beebe The Salt Lake Tribune

Published August 20, 2012 11:38 am
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
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It's been almost five years since the economy cracked open and set in motion a recession that no contemporary Utahn had ever seen before.

And with that much time to look at, government sleuths have assembled a stack of numbers that make plain just how deeply thousands of Utahns were hurt — and continue to be hurt — by the downturn.

In the months between the start of the recession in December 2007 and March 2010, when employment numbers finally stopped falling, 93,400 jobs had been eliminated, according to figures compiled by the Bureau of Labor Statistics, the government's principal agency for collecting job numbers.

Said another way, 7.4 percent of all the jobs in the state disappeared during the two-plus years, a staggering decline not seen in modern times. As the months ground on, more and more people were pounding the streets, knocking on doors and surfing job sites instead of buying clothes, going to the movies and socking away money for retirement or their kids' college funds.

The losses suggest that an army of unemployed was quietly building as the rest of Utah looked the other way, the latter perhaps deluded by the state's comparatively low jobless rates during the recession, which may have been something of a mirage. Even today, three years after the official end of the recession, 81,000 people, a number roughly equivalent to the population of Ogden, are looking for work, while thousands more have given up or are underemployed.

"We haven't had anything like that since [the worst years of the Great Depression], when a third of the labor force was lost — and 2009 was the worst year since the 1930s," said Jim Wood, who runs the University of Utah's Bureau of Economic and Business Research.

"It's really demoralizing," said Mike Christensen, an unemployed geographer who hasn't had a steady job in more than three years. "There are some days when I just don't want to get out of bed."

Looking back, 2009 was the hardest year Utah faced during the recession, and January was the poster boy for the carnage. Prior to that month, Utah had seen four really bad periods of job losses. Still nothing compared with January, when employers showed 13,000 workers the door — the biggest number since the government began tracking monthly employment changes in 1990.

Mark Knold, the state Department of Workforce Services's chief economist, said there was no way to prepare for the impacts. Predicting when job losses would end during previous recessions was fairly straightforward because the causes of the downturns were largely understood. But this recession was triggered by a global financial crisis and an unprecedented collapse of the housing market.

The thinking in Knold's office was "very much along the lines of where is this thing going, where is this thing going to stop or end?"

"It was very difficult to do forecasting then because you didn't know the parameters of what was going on. There was so much of this bad mortgage debt that had been so tentacled out into the economy that we didn't know the full magnitude of who was going to [get laid off]," Knold said.

As astonished as he was by the magnitude of the job losses, Knold said the biggest surprise was that Utah's unemployment rate never officially got above 8.3 percent. The reason, he said, was probably rooted in Utah's demographics.

To be counted in the labor force, jobless workers have to be actively searching for employment. If someone becomes discouraged and stops looking, that person essentially becomes invisible to the system. Because Utah has the youngest workforce in the U.S., it was relatively easy for a discouraged worker to escape the recession by moving home to wait until the job market improved. By contrast, states with older labor forces had higher unemployment rates because fewer jobless workers could afford to ride out the recession.

Knold said the escape option probably depressed the actual unemployment rate by as much as 2 percentage points. Had more young Utahns remained in the hunt for work instead of moving home or going back to college, the official jobless rate might have been as high as 10 percent. And if nobody, young or old, gave in to despair, the rate could have gone to 13 percent, he said. That would have been unlikely, but it perhaps illustrates the true extent of job losses that official counts didn't capture.

With the exception of a few temporary jobs, Christensen has been looking for a job since 2008, when some of the biggest layoffs began to hit the state. The 35-year-old exhausted his unemployment benefits by 2010. He hasn't been able to afford the townhouse he bought on the northwest side of Salt Lake City when he still had a full-time job. On the other hand, he can't afford to sell it. He paid $150,000 for the unit in 2007. Today, he knows neighbors who are willing to sell their units for $100,000 or less. Having burned through his savings, Christensen is effectively broke. If it weren't for help from his parents, he couldn't pay his bills.

"Somebody said an extended period of unemployment puts you through the same emotional stress as having a spouse pass away. Looking back at my whole experience of being out of work, I can attest to that. It's emotionally draining," he said.

Because he isn't collecting jobless benefits, Christensen doubts whether he is counted as unemployed, even though he hasn't stopped looking for a job. He said he faces two hurdles in returning to the workforce, though. Jobs in his field as a geographer are few and far between, and a new generation of software makes it possible to retrain existing employees to use geographic mapping and analysis tools instead of hiring trained professionals, he said.

One sign of proof that lots of younger people hid from the recession with help from parents and family is the state's labor-force participation rate — the percentage of people employed or looking for work. By last April, Utah's rate had plunged 5.7 percent from the start of the recession, to 62.6 percent, the biggest decline of any state.

College enrollments are another sign. Between the 2006-2007 and 2007-2008 academic years, student enrollment at Utah colleges and universities increased only 1.1 percent. Three academic years later, enrollment numbers were 21 percent higher — about 21,000 students, according to Utah System of Higher Education figures.

Christensen is about to join the trend. This fall, he'll start a one year program at the University of Utah to get a graduate certificate in urban planning. If that doesn't produce a job quickly, he may pursue a master's degree in city and metropolitan planning.

"I've noticed that there is a lot more transportation planning in Utah. I'm hoping that having more schooling will give me a leg up and get me into the field," Christensen said.

The road forward for thousands of similarly unemployed Utahns isn't smooth, even though the state's jobs engine has restarted. Since employment bottomed out in February 2010, the economy has regained only two of every three jobs that were lost. What's more, the pace of the job gains during the recovery is still slower than the speed at which they were being lost when the recession started.

Employment has been growing at an annual rate of 2.5 percent this year. But that's below the long-term average of 3.1 percent per year since 1950. Knold and other economists say there's little possibility of improvement until housing markets bounce back and political gridlock in Washington eases.

Noting that a huge psychological hangover from the recession still prevails in Utah and the U.S., "There is still to this day the lingering effects of that time period… whether it's credit markets trying to right themselves or businesses that are still risk-adverse or feel timid and shy about the direction of the economy," Knold said.

"There still needs to be a stronger magnitude of convincing that the economy is moving forward and that they need to go with it," he said.

Until then, it's hard to see how the labor market will get much better soon.

pbeebe@sltrib.comTwitter: @sltribpaul



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