The employment recovery from the Great Recession offers important lessons for policymakers, employers, and other decisionmakers as they face the employment crisis created by Covid-19. This brief highlights five specific lessons:
- Prolonged downturns leave lasting scars, affecting older workers, young workers just entering the labor market, and workers of all ages who experience long bouts of unemployment. The risk of long-term scarring increases the urgency of accelerating economic recovery when the pandemic wanes.
- Strong labor markets improve upward mobility. A persistently strong job market creates new opportunities for workers who might otherwise be excluded, including workers of color, women, and young people.
- Unemployment is an incomplete measure of labor market conditions. For example, it misses people who leave the labor force entirely. Policymakers should look at other metrics, such as employment of prime-age workers, when assessing the strength of the labor market.
- Strengthening labor markets accelerate growth in worker pay. Policymakers should thus track worker pay as a measure of how well labor markets are recovering.
- As we embark on the next recovery, policymakers should place greater weight on incoming evidence and use it to update their models and theories.