US recession’s effects still felt 10 years later
As the United States nears its longest economic expansion on record, it’s tempting to proclaim that all the problems brought about by the Great Recession have been fixed.
That would be wrong.
Despite the currently healthy economic figures, from unemployment to foreclosure rates, under the surface the country still bears bruises from the financial crisis. Some of them may never heal without a targeted treatment plan.
Here’s what’s still ailing America after ten years on the mend.
1. Wins for big cities, losses for small towns
The recession and its aftermath shifted the geography of prosperity in America — and workers still haven’t caught up.
Manufacturing employment, which had been in decline since the 1980s, dropped suddenly between 2007 and 2009 as factories failed. That left towns in Michigan, Ohio and upstate New York gasping. “Those places were hit harder by the recession and are slower to recover than the national average,” said Dave Swenson, an economics professor at Iowa State University.
In a double whammy for residents of declining towns, the places where new opportunities arose — bigger cities like San Francisco and New York — didn’t add nearly enough apartments after the housing crisis to keep up with demand. Wage gains in big cities have concentrated at the top, so even if you found a mid-skill job serving the tech or financial industries, moving to take that job was financially impossible.
“The cost of living in core metro areas has just become prohibitive,” Swenson said. “It’s slowed some of that migration into the most urban areas.”
2. State budgets atrophied
State and local tax revenues took a massive hit during the recession and were only partially backfilled by federal grants, forcing widespread layoffs that weakened all manner of public services. On the surface, according to the Pew Charitable Trusts, tax collections have recovered — in 2018, revenues across all 50 states exceeded their 2008 levels by 13.4%.
However, states have also had to cope with rising costs, particularly for Medicaid. That’s made it more difficult to allocate funds for other priorities. State spending on infrastructure as a share of gross domestic product is as low as it’s been in 50 years, Pew found, and state governments have 132,300 fewer non-education employees than they did in 2008.
Funding for schools also remains short. Twenty-nine states are now spending less per K-12 pupil than they did in 2008, and state spending on higher education is 13% lower, as public universities have shifted the tuition burden on to students — which, one gtx_ads_conf.ads["ad-manager-551125"]= {"custom_css":[],"ad_details":[{"min_width":"","max_width":"","dfp_ad_sizes":[{"dfp_ad_width":"300","dfp_ad_height":"250"}]}],"ad_id":551125,"ad_container":"div-ad-manager-551125","ad_placement":"in-article","ad_name":"ad-manager-551125","position":"in_article","article_position":3,"out_of_page_ad":null,"lazyload":"global"};
Those low interest rates may be sapping the economy of its vitality. One
