Posted by Nicole Wright, Self-Sufficiency Research Clearinghouse Staff

The Great Recession was the most significant economic downturn since the Great Depression. Spanning from 2007 to 2009, the recession left millions of people unemployed, asset-poor, and in need of supportive services. Recently, scholars have analyzed the recession’s effects on everything from child development to the NBA’s renegotiation of its collective bargaining agreement. The breadth of recession-related research alone speaks to its enormous impact, the repercussions of which continue to reverberate nearly a decade later. 

The burst of the U.S. housing bubble in 2008 snowballed into a global financial crisis and the Great Recession. Caused by a mix of expansionary monetary policy, global imbalances, miscalculation of risk, and overly lenient financial regulation, the recession has had a particular impact on the self-sufficiency field and on the American workforce. Low-income workers and families, as well as public assistance programs continue to adapt to a post-recession environment characterized by growing program demands and diminishing state and local budgets.

The Great Recession exacerbated existing trends in the American workforce. For example, the “tradable” sector of the economy’s industries, which encompasses the manufacturing of goods and services that are traded, accounted for virtually no employment growth from the years 1990-2008. Almost all job growth was concentrated in non-tradable sectors, where government and health care have been the largest employers. Manufacturing and domestic production, on the other hand, had long been on the decline leading up to the recession. These tradable industries, reliant on competitive standing in the global market, were hit particularly hard by the downturn in the economy, contributing to disproportionate increases in unemployment in the manufacturing sector.   

According to a 2014 study, manufacturing payroll employment dropped by 5.7 million between 2000 and 2010. This job loss is at least partially due to the decline in employment as a whole as a result of the Great Recession. However, the drop in manufacturing employment is a “long-standing feature” of the U.S. economy and is indicative of a world-wide trend shared by high-income economies.

The city of Detroit, built largely on the automobile industry, in many ways exemplifies the Great Recession’s amplified effect on struggling manufacturing industries. According to a 2012 survey conducted in Detroit, three out of four respondents reported that at least one friend or family member lost work during the recession. Although the recession impacted workers across the board, studies have shown that employment problems are particularly persistent for less-educated, blue-collar, and African American workers. A lack of a private safety net has further exacerbated the effects of unemployment for this population.

Recovery from the recession has been slow nationwide, and the shock waves it sent through the economy remain, particularly for disadvantaged and low-income populations. Fortunately, the economy began showing signs of growth in mid-2009. This has been primarily attributed to the financial stabilization bill (TARP) and the American Recovery and Reinvestment Act (ARRA). Workforce programs funded under ARRA have benefited job seekers, employers, and communities alike. Over 152 grantees received funding to train nearly 200,000 Americans in emerging and growing sectors such as health care and renewable energy. The workforce investment grants had a budget of $750 million, promoted partnerships among industry representatives and grantees, and were awarded to a diverse range of grantees in a variety of sectors. However, long-term unemployment persists, and the American workforce will need to continue to adapt to a post-recession environment for the economy to fully recover for all.

Learn More About the Great Recession From the SSRC 

The Self-Sufficiency Research Clearinghouse library contains numerous articles, reports, and stakeholder resources on the Great Recession and its effects on the self-sufficiency field, including:

• Serving Temporary Assistance for Needy Families (TANF) recipients in a post-recession environment: In this brief, the authors examined how states have responded to the evolving demands on TANF programs following the Great Recession and describe opportunities for growth and improvement.
• “The help that we get”: Racial differences in private safety nets and the scarring effects of unemployment following the Great Recession: In this article, the author highlighted the crucial role played by private safety nets in ameliorating the effects of unemployment following the Great Recession, as well as the unequal distribution of these private resources along racial lines. 
• The long-term unemployed in the wake of the Great Recession: In this research brief, the author examined the characteristics of the long-term unemployed in the aftermath of the Great Recession and compared them with those who are short-term unemployed to make recommendations for more effective solutions to long-term unemployment.
• Life after welfare: The effects of recession:  In this report, the authors examined the outcomes of clients leaving Temporary Cash Assistance (TCA) in Maryland during the Great Recession, when economic conditions were particularly harsh, and drew comparisons in earnings and employment outcomes of clients who left TCA during three periods: the 2001 recession, the recovery following this recession (2005-2007), and the Great Recession.

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