ARCHIVED—Small Business Quarterly - February 2012, vol. 13, no. 4

Feature Story

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Employment Recovery: A Comparison of the Last Three Recessions

As employment levels return to those seen prior to the recession, it is an opportune time to compare employment recovery from the most recent recession with the two that preceded it. Using Statistics Canada's Labour Force Survey,^{Footnote 1} Figure 1 illustrates private sector employment (excluding self-employment) recovery levels following the last three recessions.

Figure 1: Post-Recessionary Private Sector Employment Recovery (seasonally adjusted)

[Description of Figure 1]
Source: Industry Canada calculations based on Statistics Canada's Labour Force Survey.
Note: The circles indicates end of recession.

As shown, the 1981–1982 recession, although lasting only six quarters (Q3 1981 to Q4 1982), was marked by a sharp and significant decrease in private sector employment. In total, close to 640 000 private sector jobs were lost in the trough. Private sector jobs began to recover moderately but steadily following the trough, reaching pre-recessionary levels 11 quarters after the trough.

The 1990–1992 recession was more prolonged, lasting 10 quarters (Q2 1990 to Q3 1992), and was just as severe as the 1981–1982 recession in terms of the number of job losses; however, unlike after the previous recession, job losses continued for an additional three quarters. Consequently, from peak to trough, a total of 647 000 jobs were lost. Private sector employment began to increase slowly by the third quarter of 1993; however recover was slow. It took 15 quarters after the trough for private sector employment to return to pre-recessionary levels. This lag led to this post-recessionary period to be dubbed the "jobless recovery."

The 2008–2009 recession lasted only three quarters (Q4 2008 to Q2 2009), but experienced a more rapid initial decline in private sector employment than the two previous recessions.

Nevertheless, in terms of total jobs lost and length of time to recovery, the 2008–2009 recession was less severe than the 1981–1982 and 1990–1992 recessions. Employment continued to shrink for an additional quarter after the 2008–2009 recession, but the total number of jobs lost in the trough (Q3 2009) was only 404 000 compared with 640 000 and 647 000 jobs lost during the 1981–1982 and 1990–1992 recessions respectively. Moreover, jobs began to recover quite quickly after the 2008–2009 recession, with private sector employment restored to pre-recessionary levels eight quarters after the trough.

Recent disaggregation of employment data allows for analysis by size of business during the recent recession. As shown in Table 1, small businesses (1–99 employees) in the private sector were affected most by the 2008–2009 recession in terms of total jobs lost in the trough. In their respective troughs, small businesses shed 160 000 jobs, while medium-sized (100–500 employees) and large (more than 500 employees) businesses lost 131 000 and 141 000 jobs respectively. Nevertheless, in terms of the percentage of jobs lost, large businesses were hit hardest, losing 11.8 percent of their total number of pre-recession jobs compared with 2.1 percent and 5.8 percent lost by small and medium-sized businesses respectively. In terms of recovery, small businesses fared much better than medium-sized and large businesses, returning to pre-recessionary levels only three quarters after the trough. In comparison, it took nine quarters for medium-sized businesses in the private sector to recover and large businesses in the private sector have not yet recovered.

Table 1: Post-Recessionary Private Sector Employment Recovery (seasonally adjusted)
Recession	Duration of Recession (quarters)	Job Losses (start of recession to trough)			Time to Recovery after Trough (quarters)
Recession	Duration of Recession (quarters)	Duration of Job Losses (quarters)	Total Number of Job Losses	Job Losses as a Percentage of Total Pre-Recession* Jobs	Time to Recovery after Trough (quarters)
Source: Industry Canada calculations based on Statistics Canada's Labour Force Survey. * Pre-recession is defined as the quarter prior to the official start of the recession. Total pre-recession private sector jobs (adjusted) were approximately 7 408 000 for the 1981–1982 recession, 8 584 000 for the 1990–1992 recession and 11 060 000 for the 2008–2009 recession. Note: Small, medium-sized and large business employment reached their troughs at different times during the 2008–2009 recession. As a result, the sum of job losses by size (432 000) does not equal total job losses in the trough of the recession (404 000).
1981–1982 (Q3 1981 to Q4 1982)	6	6	640 000	8.6	11
1990–1992 (Q2 1990 to Q3 1992)	10	13	647 000	7.5	15
2008–2009 (Q4 2008 to Q2 2009)	3	4	404 000	3.7	8
Small (1–99 employees)		3	160 000	2.1	3
Medium-sized (100 to 500 employees)		3	131 000	5.8	9
Large (> 500 employees)		7	141 000	11.8	Not yet recovered

In conclusion, the 2008–2009 recession was less severe for private sector employment than the 1981–1982 and 1990–1992 recessions. Small businesses, although losing the most jobs during the last recession, quickly regained jobs and recently surpassed pre-recessionary employment levels.