Hershbein, Brad J.

Stuart, Bryan A.

English

Upjohn Research

Employment Research Newsletter Volume 27 Number 3 Article 1 7-23-2020 The Enduring Local Harm from Recessions Brad J. Hershbein W.E. Upjohn Institute for Employment Research, hershbein@upjohn.org Bryan A. Stuart George Washington University, bastuart@gwu.edu Follow this and additional works at: https://research.upjohn.org/empl_research  Part of the Labor Economics Commons Citation Hershbein, Brad J. and Bryan A. Stuart. 2020. "The Enduring Local Harm from Recessions." Employment Research 27(3): 1-4. https://doi.org/10.17848/1075-8445.27(3)-1 This title is brought to you by the Upjohn Institute. For more information, please contact repository@upjohn.org.       JULY 2020  • VOL 27, NO 3 The Enduring Local Harmfrom RecessionsBrad J. Hershbein and Bryan A. Stuart ARTICLE HIGHLIGHTS n We study the impacts of each recession over the past 50 years on the economic health of metro areas. n Areas that suffer larger employment losses during a recession never fully recover their employment relative to less-affected areas.n Badly hit areas also have less population growth, and the share of the population that is employed, as well as per capita income, are lower for at least a decade.n These areas also grow relatively older and often become less educated, with fewer management and professional jobs.n Recessions play a role in some areas falling economically behind others, as employment opportunities shift across areas more quickly than people do.ALSO IN THIS ISSUE Workforce Data (and Knowledge) under PressureJoshua D. Hawleypage 4Recessions receive enormous attention from researchers, policymakers, and the public. Most of this attention focuses on short-run, nationwide measures like the unemployment rate and gross domestic product. Tese outcomes are clearly important, but many of the broader and longer-lasting consequences of recessions remain uncertain. Tis is particularly true for how recessions afect local labor markets, such as metropolitan areas. In particular, do badly afected areas eventually recover to be on par with their less-afected peers, or is the economic harm sufered during recessions persistent, possibly putting severely hit areas on a permanently lower trajectory for employment and earnings? To answer this question, we examine the long-term impacts of fve national recessions— from the one in the mid-1970s through the Great Recession—on employment, population, earnings, and other outcomes for 363 metropolitan areas in the United States. Because the severity of each recession varied across these areas—some had heavy losses in employment while others actually gained jobs—we essentially compare worse-hit places to less-afected places, tracking outcomes for several years afer each recession’s end. We fnd that, for every recession, harder-hit metropolitan areas sufer long-lasting economic harm relative to less-afected areas. Teir paths diverge, and the former group falls behind in terms of employment, population, employment rates, and per capita earnings. Specifcally, an area that loses 5 percent of its employment during a recession—the typical loss during the Great Recession—on average has 6.2 percent less employment than it otherwise would have almost a decade later. Population also falls, mostly because of fewer people moving in rather than more people moving out, but this loss is not as large as that for employment. Consequently, the share of the adult population that is employed falls by 2 percentage points, or 1 out of every 50 people. Tis decline in the employment rate also leads to a long-term 3.2 percent drop in per capita earnings. Moreover, these persistent economic impacts are ofen accompanied by modest, but not trivial, changes in the demographic characteristics of afected places. Te share of residents aged 65 and over increases, while the share aged 15 through 39 We fnd that, for every recession,harder-hit metropolitan areas suferlong-lasting economic harm relativeto less-afected areas. falls. Fewer workers are employed in managerial, professional, and technical occupations, and more are employed in manual and service jobs. Te share of residents with a college degree falls. Even adjusting for these demographic changes, however, the majority of the employment and earnings impacts remain. Our fndings have important implications for the reallocation of economic activity across places, labor market dynamism, economic opportunities for workers and their children, and optimal policy responses. While our social safety net is mostly set up to respond to current (or very recent) economic conditions, our fnding that recessions have enduring impacts on places long afer the national economy has recovered suggests that targeting aid based on a longer economic history may be necessary to preserve economic opportunity for all. How Recessions Can Have Long-Lasting Local Efects… Recessions are periods of depressed economic activity, and they coincide with large cuts to employment as the demand for labor falls. Tese declines generally vary across places because of        EMPLOYMENT RESEARCH  • JULY 2020 W.E. UPJOHN INSTITUTE The Enduring Local Harm from Recessions diferences in industry specialization or in the types of workers afected, as well as the nature of the recession. If during a recession most frms temporarily lay of workers or reduce their hours, then employment, wages, and the share of people employed are Areas that lost 5 percent moreof their employment during arecession have employment rates1–2 percentage points lower,even up to a decade later. likely to quickly revert to previous trends once conditions improve. If, on the other hand, a recession causes employers to change their production processes or shut down, there could be long-term scarring in a local labor market. Tis could also happen if highly skilled (and higher-earning) workers are more likely to leave for other areas not as badly afected, or if the recession diverts would-be in-migrants—both people and businesses—to other areas. Recent research has found support for all these possibilities, but has not systematically examined the long-term outcomes of places badly hit by recessions. …and Vary across Places We thus look at places as defned by metropolitan areas. Tese 363 areas are groups of counties tied together by commuting patterns and having an urban center of at least 50,000 people. Although they exclude rural areas, they account for between 66 and 83 percent of the country’s people and jobs between 1969 and 2016. Tese metropolitan areas proxy for local labor markets, the places in which people work and look for jobs. (Our results are similar when we examine commuting zones, which include rural areas.) Figure 1  The Severity of the Great Recession Varied Considerably across Metropolitan Areas NOTE: Figure shows the change in the natural log of employment (approximately equal to the percent change in employment) between 2007 and 2009 for 363 metropolitan areas (Core-Based Statistical Areas, as defned in 2003 by the Ofce of Management and Budget). Areas in darker colors experienced larger employment losses. SOURCE: Authors’ analysis of Bureau of Economic Analysis Regional data. Te severity of recessions varies considerably across metropolitan areas. Figure 1 shows this variation for the last recession we analyze, the Great Recession of 2007–2009. We measure the local severity of the recession by the change in employment between the national peak and the national trough— in this case between 2007 and 2009—in each metropolitan area. On the map, areas with darker red shading sufered greater proportional employment losses. Although some entire states were badly afected—Michigan, notably, as well as the Sun Belt states of Florida and Arizona—there are also several cases where neighboring areas fared quite diferently, such as Providence and Boston, or Pittsburgh and Youngstown. Our analysis essentially compares the long-term outcomes of places that were more severely afected to those that were less afected, and we do this separately for each of the past fve recessions: the ones in 1973–1975, 1980–1982, 1990–1991, 2001, and 2007–2009. Of course, the metropolitan areas that sufered severe employment losses may have difered in several ways from those with smaller losses, and it is important to control for these diferences. Terefore, we are also careful to account for diferences in prerecession population growth (by age group), and we implicitly compare metropolitan areas within each of nine regions in the country. Moreover, our analytical approach, called an event study, allows us to confrm that more- and less-afected areas were trending similarly before the recession; this helps ensure that the less-afected areas serve as a good comparison to what would have happened in the more-afected areas had the recession there not been as severe. Local Recessions Don’t Just Fade Away When we implement this approach, we fnd that employment doesn’t just fall more immediately in harder-hit areas (this happens by construction), but it remains depressed for at least a 2 EMPLOYMENT RESEARCH  •  JULY 2020 W.E. UPJOHN INSTITUTE decade, and ofen longer. Specifcally, we estimate that for every additional 1 percent drop in employment during a recession, employment is between 0.8 and 1.7 percent lower than it otherwise would have been seven to nine years afer the recession ended. For a Great Recession–sized shock, when a 5 percent employment loss was not unusual, this means a long-term reduction in employment of roughly 4–8 percent. To be clear, we don’t mean that employment is necessarily lower than it was before the recession began, but that it is lower than it would have been in the absence of the recession. Put diferently, growth is on a lower trajectory. We also fnd this same pattern of persistently lower growth in an area’s population. Every 1 percent greater employment loss during a recession translates to between 0.3 and 0.7 percent lower population nearly a decade later. One might think this is driven by people moving out of badly afected areas, but we fnd the opposite. Fewer people move away; rather, the population loss occurs because fewer people subsequently move into hard-hit areas, and this efect lasts a long time. Moreover, the composition of the population shifs, with the population of badly hit areas aging and ofentimes having fewer highly educated professional workers than less-afected areas. Put together, the long-term impacts on employment are greater than those on population, and thus the employment rate—the share of people with jobs—also sufers long-term declines in areas that experienced more severe recessions. We illustrate this pattern in Figure 2, which shows these declines for each recession. For each panel, the two vertical lines indicate the beginning and end of the recession (in terms of employment). Tat the thick blue line is near 0 before the recession indicates that areas have similar trends in the employment rate, regardless of how large their employment losses Figure 2  In Every Recession, Harder-Hit Areas Sufer Persistent Declines in Employment Rates A: 1973-1975 recession B: 1980-1982 recession 0.25 0.25 0.00 0.00 -0.25 -0.25 -0.50 -0.50 -0.75 -0.75 -1.00 -1.00 -1.25 1969 1971 1973 1975 1977 1979 1981 1983 1985 1975 1977 1979 1981 1983 1985 1987 1989 1991 -1.25 C: 1990-1991 recession D: 2001 recession 0.25 0.25 0.00 0.00 -0.25 -0.25 -0.50 -0.50 -0.75 -0.75 -1.00 -1.00 -1.25 -1.25 1985 1987 1989 1991 1993 1995 1997 1999 2001 1996 1998 2000 2002 2004 2006 2008 2010 2012 E: 2007-2009 recession 0.25 0.00 -0.25 -0.50 -0.75 -1.00 -1.25 2003 2005 2007 2009 2011 2013 2015 NOTE: Figure shows, separately for each recession, the impact of a 1 percent greater employment loss during a recession (between the vertical lines) on the employment rate over time. Complete recovery is reached when the solid blue line returns to 0. Dashed lines indicate 95 percent confdence intervals. SOURCE: Authors’ calculations using Bureau of Economic Analysis Regional data (employment) and Surveillance, Epidemiology, and End Results data (population). will be. In each case, as expected, the area of 150,000 workers, that’s 1,500 to employment rate falls sharply during 3,000 fewer people with jobs. the recession. Tis decline persists, Policy Implications however, once the recession is over: for the 1973–1975, 1990–1991, and Te long-term impacts of local 2001 recessions, there appears to recessions also afect income, and be no recovery at all, while there is we estimate that in badly hit areas, only incomplete recovery for the long-term per capita earnings are 1980–1982 and 2007–2009 recessions. between 1 and 5 percent lower than Consequently, areas that lost 5 percent they would have been in the absence more of their employment during a of the recession. Tese losses are recession have employment rates 1–2 disproportionately borne by residents percentage points lower, even up to a in the bottom half of the earnings decade later. For a typical metropolitan distribution. 3                        EMPLOYMENT RESEARCH  • JULY 2020 W.E. UPJOHN INSTITUTE The Enduring Local Harmfrom Recessions What explains these long-term impacts? We are actively working on this question, but at a fundamental level, employment opportunities shif across areas more quickly than people do. Altogether, our research indicates that recessions produce enduring economic disruptions to local economies, and this pattern has existed for at least the past fve Recessions produce enduringeconomic disruptions tolocal economies, and thispattern has existed for at leastthe past fve decades. decades. Consequently, recessions likely play a role in the shif of economic activity across places over time; this, in turn, has implications for economic opportunity for people who grow up in areas badly hit— especially repeatedly—by recessions. Te social safety net meant to deal with cyclical, temporary labor market disruption—unemployment insurance, SNAP (food stamps), and one-time cash grants—has not, in the past, led areas to recover. Instead, public policy may need to come up with more extensive and longer-term programs to help workers improve their skills, help businesses retool, and, more broadly, help communities reinvest in economic development. Financial support for this project was provided by theU.S. Department of Labor Scholars Program. Brad J. Hershbein is a senior economist at theUpjohn Institute, and Bryan A. Stuart is anassistant professor of economics at GeorgeWashington University. 4 Workforce Data(and Knowledge)under Pressure Joshua D. Hawley In the frst half of 2020, more than 40 million people fled an initial unemployment insurance claim, and according to the U.S. Department of Labor, over 33 million people were collecting benefts—both all-time highs (see Figure 1). As a result of COVID-19 and its efect on the economy, nearly every county in the United States experienced record unemployment growth in April, with little improvement since. Strengthening Workforce Data Is Critical To address such rampant unemployment, policymakers require more powerful and more robust employment data systems than currently exist. In my role as a professor and researcher at the Ohio State University, I worked with state agencies and academic colleagues to build a longitudinal data system linking information from education, workforce development, and social services. Te linked data have allowed researchers in government and academia to study the impact of individual outcomes for public policies, such as employment or education. Te book Data Science in the Public Interest: Improving Government Performance in the Workforce, recently published by the Upjohn Institute (see p. 7 for more details), describes how state-specifc data systems like the one in Ohio can help us improve the capacity to address challenges such as the rapid increases in unemployment (Hawley 2020). I recommend four specifc steps: 1) Increase the use of administrative records in employment statistics. 2) Better fund workforce data system infrastructure. 3) Explore partnerships with private organizations that have signifcant data on the labor force. 4) Build on the partnerships between universities and states to make use of these data, especially to focus attention on inequalities in the labor market. ARTICLE HIGHLIGHTS n The COVID-19 pandemic is an unprecedented challenge for federal and state data systems needed to design policy responses. n States cannot improve their systems on their own but need federal investment and collaboration with outside partners.n Cloud computing and tiered access to data offer efficiency advantages, but both the federal and many state systems need technology modernization for the shift to happen.n Partnerships with universities are critical to ensuring that data systems are used to their full potential to solve social problems, including racial inequality in labor markets.

The Enduring Local Harm from Recessions

Upjohn Institute Policy and Research Briefs Upjohn Research home page 5-4-2020 The Enduring Local Harm from Recessions Brad J. Hershbein W.E. Upjohn Institute for Employment Research, hershbein@upjohn.org Bryan A. Stuart George Washington University Upjohn Author(s) ORCID Identifier: https://orcid.org/0000-0002-2534-8164 Follow this and additional works at: https://research.upjohn.org/up_policybriefs  Part of the Labor Economics Commons Citation Hershbein, Brad J. and Bryan A. Stuart. 2020. "The Enduring Local Harm from Recessions." Policy Brief. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/pb2020-25 This title is brought to you by the Upjohn Institute. For more information, please contact repository@upjohn.org. MAY 2020 POLICY BRIEF The Enduring Local Harm from Recessions Brad J. Hershbein and Bryan A. Stuart BRIEF HIGHLIGHTS  n  We study the impacts of each recession over the past 50 years on the economic health of metro areas.n  Areas that suffer larger employment losses during a recession never fully recover their employment relative to less affected areas.n  Badly hit areas also have less population growth, and the share of the population that is employed, as well as per capita income, are lower for at least a decade.n  These areas also grow relatively older and often become less educated, with fewer management and professional jobs.n  Recessions play a role in some areas falling economically behind others, as employment opportunities shift across areas more quickly than people do.For additional details, see the working paper at https://research.upjohn.org/up_workingpapers/325/.Recessions receive enormous attention from researchers, policymakers, and the public. Most of this attention focuses on short-run, nationwide measures like the unemployment rate and gross domestic product. Tese outcomes are clearly important, but many of the broader and longer-lasting consequences of recessions remain uncertain. Tis is particularly true for how recessions afect local labor markets, such as metropolitan areas. In particular, do badly afected areas eventually recover to be on par with their less-afected peers, or is the economic harm sufered during recessions persistent, possibly putting severely hit areas on a permanently lower trajectory for employment and earnings? To answer this question, we examine the long-term impacts of fve national recessions—from the one in the mid-1970s through the Great Recession—on employment, population, earnings, and other outcomes for 363 metropolitan areas in the United States. Because the severity of each recession varied across these areas—some had heavy losses in employment while others actually gained jobs—we essentially compare worse-hit places to less-afected places, tracking outcomes for several years afer each recession’s end. We fnd that, for every recession, harder-hit metropolitan areas sufer long-lasting economic harm relative to less-afected areas. Teir paths diverge, and the former group falls behind in terms of employment, population, employment rates, and per capita earnings. Specifcally, an area that loses 5 percent of its employment during a recession— the typical loss during the Great Recession—on average has 6.2 percent less employment than it otherwise would have almost a decade later. Population also falls, mostly because of fewer people moving in rather than more people moving out, but this loss is not as large as that for employment. Consequently, the share of the adult population that is employed falls by 2 percentage points, or 1 out of every 50 people. Tis decline in the employment rate also leads to a long-term 3.2 percent drop in per capita earnings. Moreover, these persistent economic impacts are ofen accompanied by modest, but not trivial, changes in the demographic characteristics of afected places. Te share of residents aged 65 and over increases, while the share aged 15 through 39 falls. Fewer workers are employed in managerial, professional, and technical occupations, and more are employed in manual and service jobs. Te share of residents with a college degree falls. Even adjusting for these demographic changes, however, the majority of the employment and earnings impacts remain. Our fndings have important implications for the reallocation of economic activity across places, labor market dynamism, economic opportunities for workers and their children, and optimal policy responses. While our social safety net is mostly set up to respond to current (or very recent) economic conditions, our fnding that recessions have enduring impacts on places long afer the national economy has recovered suggests that targeting aid based on a longer economic history may be necessary to preserve economic opportunity for all. How Recessions Can Have Long-Lasting Local Efects… Recessions are periods of depressed economic activity, and they coincide with large cuts to employment as the demand for labor falls. Tese declines generally vary across   POLICY BRIEF | MAY 2020 W.E. UPJOHN INSTITUTE The Enduring Local Harm from Recessions We fnd that, for every recession, harder-hit metropolitan areas sufer long-lasting economic harm relative to less-afected areas. places because of diferences in industry specialization or in the types of workers afected, as well as the nature of the recession. If during a recession most frms temporarily lay of workers or reduce their hours, then employment, wages, and the share of people employed are likely to quickly revert to previous trends once conditions improve. If, on the other hand, a recession causes employers to change their production processes or shut down, there could be long-term scarring in a local labor market. Tis could also happen if highly skilled (and higher-earning) workers are more likely to leave for other areas not as badly afected, or if the recession diverts would-be in-migrants—both people and businesses—to other areas. Recent research has found support for all these possibilities, but has not systematically examined the long-term outcomes of places badly hit by recessions. …and Vary across Places We thus look at places as defned by metropolitan areas. Tese 363 areas are groups of counties tied together by commuting patterns and having an urban center of at least 50,000 people. Although they exclude rural areas, they account for between 66 and 83 percent of the country’s people and jobs between 1969 and 2016. Tese metropolitan areas proxy for local labor markets, the places in which people work and look for jobs. (Our results are similar when we examine commuting zones, which include rural areas.) Te severity of recessions varies considerably across metropolitan areas. Figure 1 shows this variation for the last recession we analyze, the Great Recession of 2007–2009. We measure the local severity of the recession by the change in employment between the national peak and the national trough—in this case between 2007 and 2009—in each metropolitan area. On the map, areas with darker red shading sufered greater proportional employment losses. Although some entire states were badly afected— Michigan, notably, as well as the Sun Belt states of Florida and Arizona—there are also several cases where neighboring areas fared quite diferently, such as Providence and Boston, or Pittsburgh and Youngstown. Figure 1  The Severity of the Great Recession Varied Considerably across Metropolitan Areas NOTE: Figure shows the change in the natural log of employment (approximately equal to the percent change in employment) between 2007 and 2009 for 363 metropolitan areas (Core-Based Statistical Areas, as defned in 2003 by the Ofce of Management and Budget). Areas in darker colors experienced larger employment losses. SOURCE: Authors’ analysis of Bureau of Economic Analysis Regional data. 2    POLICY BRIEF | MAY 2020 W.E. UPJOHN INSTITUTE Our analysis compares the long-term outcomes of places that were more severely afected to those were that less afected, for each of the past fve recessions. Our analysis essentially compares the long-term outcomes of places that were more severely afected to those were that less afected, and we do this separately for each of the past fve recessions: the ones in 1973–1975, 1980–1982, 1990–1991, 2001, and 2007–2009. Of course, the metropolitan areas that sufered severe employment losses may have difered in several ways from those with smaller losses, and it is important to control for these diferences. Terefore, we are also careful to account for diferences in prerecession population growth (by age group), and we implicitly compare metropolitan areas within each of nine regions in the country. Moreover, our analytical approach, called an event study, allows us to confrm that more and less afected areas were trending similarly before the recession; this helps ensure that the less-afected areas serve as a good comparison to what would have happened in the more-afected areas had the recession there not been as severe. Local Recessions Don’t Just Fade Away When we implement this approach, we fnd that employment doesn’t just fall more immediately in harder-hit areas (this happens by construction), but it remains depressed for at least a decade, and ofen longer. Specifcally, we estimate that for every additional 1 percent drop in employment during a recession, employment is between 0.8 and 1.7 percent lower than it otherwise would have been seven to nine years afer the recession ended. For a Great Recession–sized shock, when a 5 percent employment loss was not unusual, this means a long-term reduction in employment of roughly 4–8 percent. To be clear, we don’t mean that employment is necessarily lower than it was before the recession began, but that it is lower than it would have been in the absence of the recession. Put diferently, growth is on a lower trajectory. We also fnd this same pattern of persistently lower growth in an area’s population. Every 1 percent greater employment loss during a recession translates to between 0.3 and 0.7 percent lower population nearly a decade later. One might think this is driven by people moving out of badly afected areas, but we fnd the opposite. Fewer people move away; rather, the population loss occurs because fewer people subsequently move into hard-hit areas, and this efect lasts a long time. Moreover, the composition of the population shifs, with the population of badly hit areas aging and ofentimes having fewer highly educated professional workers than less-afected areas. Put together, the long-term impacts on employment are greater than those on population, and thus the employment rate—the share of people with jobs—also sufers long-term declines in areas that experienced more severe recessions. We illustrate this pattern in Figure 2, which shows these declines for each recession. For each panel, the two vertical lines indicate the beginning and end of the recession (in terms of employment). Tat the thick blue line is near 0 before the recession indicates that areas have similar trends in the employment rate, regardless of how large their employment losses will be. In each case, as expected, the employment rate falls sharply during the recession. Tis decline persists, however, once the recession is over: for the 1973–1975, 1990–1991, and 2001 recessions, there appears to be no recovery at all, while there is only incomplete recovery for the 1980–1982 and 2007–2009 recessions. Consequently, areas that lost 5 percent more of their employment during a recession have employment rates 1–2 percentage points lower, even up to a decade later. For a typical metropolitan area of 150,000 workers, that’s 1,500 to 3,000 fewer people with jobs. Policy Implications Te long-term impacts of local recessions also afect income, and we estimate that in badly hit areas, long-term per capita earnings are between 1 and 5 percent lower than they would have been in the absence of the recession. Tese losses are disproportionately borne by residents in the bottom half of the earnings distribution. What explains these long-term impacts? We are actively working on this question, but at a fundamental level, employment opportunities shif across areas more quickly than people do. 3 POLICY BRIEF | MAY 2020 The Enduring Local Harm from Recessions Areas that lost 5 percent more of their employment during a recession have employment rates 1–2 percentage points lower, even up to a decade later. Figure 2  In Every Recession, Harder-Hit Areas Sufer Persistent Declines in Employment Rates A: 1973-1975 recession B: 1980-1982 recession 0.25 0.25 0.00 0.00 -0.25 -0.25 -0.50 -0.50 -0.75 -0.75 -1.00 -1.00 -1.25 -1.25 1969 1971 1973 1975 1977 1979 1981 1983 1985 1975 1977 1979 1981 1983 1985 1987 1989 1991 C: 1990-1991 recession D: 2001 recession 0.25 0.25 0.00 0.00 -0.25 -0.25 -0.50 -0.50 -0.75 -0.75 -1.00 -1.00 -1.25 -1.25 1985 1987 1989 1991 1993 1995 1997 1999 2001 1996 1998 2000 2002 2004 2006 2008 2010 2012 E: 2007-2009 recession 0.25 0.00 -0.25 -0.50 -0.75 -1.00 -1.25 2003 2005 2007 2009 2011 2013 2015 NOTE: Figure shows, separately for each recession, the impact of a 1 percent greater employment loss during a recession (between the vertical lines) on the employment rate over time. Complete recovery is reached when the solid blue line returns to 0. Dashed lines indicate 95 percent confdence intervals. SOURCE: Authors’ calculations using Bureau of Economic Analysis Regional data (employment) and Surveillance, Epidemiology, and End Results data (population). Altogether, our research indicates that recessions produce enduring economic disruptions to local economies, and this pattern has existed for at least the past fve decades. Consequently, recessions likely play a role in the shif of economic activity across places over time; this, in turn, has implications for economic opportunity for people who grow up in areas badly hit—especially repeatedly—by recessions. Te social safety net meant to deal with cyclical, temporary labor market disruption— unemployment insurance, SNAP (food stamps), and one-time cash grants—has not, in the past, led areas to recover. Instead, public policy may need to come up with more extensive and longer-term programs to help workers improve their skills, help businesses retool, and, more broadly, help communities reinvest in economic development. Financial support for this project was provided by the U.S. Department of Labor Scholars Program. Brad J. Hershbein is a senior economist at the Upjohn Institute, and Bryan A. Stuart is an assistant professor of economics at George Washington University. W.E. Upjohn Institute for upjohn.org @UpjohnInstitute WEBSITEEmployment Research 4 

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The Enduring Local Harm from Recessions

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