U.S. Department of Labor U.S. Bureau of Labor Statistics 

Issues in Labor St atistics

Labor force flows in the 

most recent recession

Summary 10-08 / July 2010

Chart 1. Inflows to and outflows from unemployment, January 2006–June 2010, seasonally adjusted

3-month moving average

Inflows to unemployment

(EU+NU)

Jan. Jan. Jan. Jan. Jan. June

2006 2007 2008 2009 2010 2010 

Outflows from unemployment

(UE+UN)

Thousands of people

Each month, the U.S. Bureau of Labor Statistics 

(BLS) reports the number of people in each of three 

labor force categories—employed, unemployed, or 

not in the labor force—from data collected in the Current Population Survey (CPS). Changes in these estimates are widely used measures of the overall health 

of the labor market. Underlying these often relatively 

small net changes is a great deal more churning: millions of people change their labor force status among 

the three categories on a monthly basis. BLS reports 

estimates of the number of people changing their labor force status from one month to the next. These 

labor force flow data series are available from February 1990 forward.1

Flow statistics can help in understanding the sources of changes in unemployment and employment 

during the recession that began in December 2007. 

Unemployment increased from 7.7 million at the December 2007 business cycle peak2 (on a seasonally 

adjusted basis) to 15.6 million in October 2009. It 

then decreased gradually, reaching 14.6 million by 

June 2010. It had increased by approximately 1 million from March 2007 to December 2007, before the 

official start of the recession.

Chart 1 shows inflows to and outflows from unemployment over the period from January 2006 to June 

2010. Inflows are the sum of (1) the number of people 

who were employed in the previous month who are

6,000

5,750

5,500

5,000

4,750

3,750

3,250

3,000

4,500

4,250

3,500

5,250

4,000
2

Issues in Labor Statistics July 2010

Labor force flows in the most recent recession

currently unemployed (the EU flow) and (2) the number of people who were not in the labor force the previous month who are currently unemployed (the NU 

flow). Outflows are the sum of unemployed-to-employed (UE) flows and unemployed-to-not-in-the-labor-force (UN) flows. (Because the flow series exhibit 

a great deal of volatility from month to month, all data 

shown in the charts are 3-month moving averages.) 

The marked deterioration in the labor market 

in mid-2008 was associated with a substantial increase in inflows to unemployment not matched by 

increases in outflows. Inflows to and outflows from 

unemployment both averaged approximately 3.6 million per month for the relatively stable period from 

September 2007 to February 2008, a period in which 

the unemployment rate increased by only 0.2 percentage point. The number of unemployed workers 

went from 7.4 million to 9.5 million from February 

to August 2008, and the unemployment rate went 

from 4.8 percent to 6.1 percent. For the same period, inflows averaged 4.1 million whereas outflows 

averaged 3.8 million. Inflows continued to increase 

after that period before virtually stabilizing in mid2009, with the 3-month moving average of inflows in 

the 5.4 million–5.5 million range from May through 

November. Outflows from unemployment increased 

at a somewhat slower rate than inflows through mid2009. As inflows continued to be well above outflows, 

the number of unemployed workers increased to 15.3 

million by November 2009, and the unemployment 

rate rose to 10.0 percent. Inflows decreased slightly 

going into 2010, with the 3-month moving average 

at 5.2 million in February before increasing back to 

the previous peak in the next few months. Outflows 

have continued to slowly increase through 2010. The 

3-month average went from 4.8 million in May 2009 

to 5.3 million in November and then to 5.5 million in 

June 2010. This is reflected in the recent small decline of the unemployment rate from 10.0 percent in 

November 2009 to 9.5 percent in June 2010.

The outflows from unemployment shown in chart 

1 equal the number of unemployed people from the 

previous month times the proportion of unemployed 

people exiting unemployment. Chart 2 shows the proportion of unemployed workers remaining in unemployment (UU), becoming employed (UE), or leaving 

the labor force (UN). The UU percentage increased 

fairly continuously from mid-2007 to mid-2009, while 

the UE and UN percentages decreased. All three percentages have stabilized since then. It can be inferred 

from chart 2 that the increased outflow from unemployment shown in chart 1 is attributable to increases 

in the number of unemployed workers rather than increases in the proportion exiting unemployment.

Changes in employment over the past few years 

have mirrored changes in unemployment. The number of employed workers decreased from 145.0 million in December 20073 to 139.1 million in June 2010 

while the employment-population ratio decreased 

from 62.7 percent to 58.5 percent. The employmentpopulation ratio had declined by 0.7 percent from 

March to December 2007, before the start of the recession.

Chart 3 shows total inflows to employment (UE 

plus NE) and total outflows from employment (EU 

plus EN). As the chart shows, outflows from employment increased greatly during the latter half of 2008 

and peaked in early 2009. The 3-month average went 

from 5.9 million in June 2008, the same level as that 

in December 2007, to 6.5 million in January 2009. 
3

Chart 2. Flows from unemployment as a percent of the previous month’s employment level,

January 2006–June 2010, seasonally adjusted 3-month moving average 

Unemployed to employed (UE)

(EU+NU)

Jan. Jan. Jan. Jan. Jan. June

2006 2007 2008 2009 2010 2010 

Unemployed to not in the labor 

force (UN)

Unemployed to unemployed

(UU)

In percent

65

60

55

50

45

40

35

30

25

20

15

10

5

70

0

Chart 3. Inflows to and outflows from employment, January 2006–June 2010, seasonally adjusted

3-month moving average 

Outflows from employment 

(EU=EN)

Jan. Jan. Jan. Jan. Jan. June

2006 2007 2008 2009 2010 2010 

Inflows from employment

(UE+NE)

Thousands of people

Issues in Labor Statistics July 2010

Labor force flows in the most recent recession

7,000

6,800

6,600

6,400

6,200

5,600

5,200

5,000

6,000

5,800

5,400
4

Outflows declined erratically from the peak, with the 

3-month average reaching 5.9 million in June 2010. 

Inflows moved within a much narrower range over 

the 2 years from December 2007 to December 2009; 

the 3-month average in December 2007 of 5.8 million 

was fairly representative of inflows during that period. 

However, inflows to employment had declined significantly before the recession from a peak 3-month 

average of 6.2 million in February 2007. In 2010, inflows increased back to a rate of 6.2 million by March.4 

However, they fell back to a rate of 6.0 million by June.

Chart 4 shows outflows from employment as a percentage of the number of employed workers from the 

previous month. It is clear that EU flows are responsible for most of the movement in outflows. EU flows 

(as a percent of the employed) increased from early 

2008 until 2009. They started to decline in late 2009 

and leveled off in early 2010 to a level comparable 

to those of late 2008. EN flows (as a percent of the 

employed) slightly declined from early-to-mid 2007 

through early 2010. 

Chart 5 breaks down total inflows to employment 

into its components, UE and NE. Total UE flows increased gradually from mid-2007 to mid-2009. As was 

stated in the discussion of chart 2, the increase is attributable to increases in the number of unemployed 

workers rather than to increases in the probability of 

getting a job if unemployed. NE flows declined over 

most of the period from 2007 through 2009. The pattern of increases and decreases in inflows to employment in late 2009 through June 2010, noted in the 

discussion of chart 3, is almost completely attributable to movements in the NE flow.

In sum, the recession that began in December 

Issues in Labor Statistics July 2010

Labor force flows in the most recent recession

In percent

Chart 4. Flows from employment as a percent of the previous month’s employment level,

January 2006–June 2010, seasonally adjusted 3-month moving average

Jan. Jan. Jan. Jan. Jan. June

2006 2007 2008 2009 2010 2010 

Employed to not in the labor force (EN)

Employed to unemployed (EU)

3.5

3.0

2.5

2.0

1.5

1.0

.5

0
5

Issues in Labor Statistics July 2010

Labor force flows in the most recent recession

4,500

4,000

3,500

3,000

2,500

2,000

1,500

Thousands of people

Jan. Jan. Jan. Jan. Jan. June

2006 2007 2008 2009 2010 2010 

Flow from not in the labor 

force to unemployment 

(NE)

Flow from 

unemployment to 

employment (UE)

Chart 5. Inflows to employment, January 2006–June 2010, seasonally adjusted 3-month moving average

n

Notes

1

 For a more detailed explanation of labor force flow data 

and further references, see “Research series on labor force status flows from the Current Population Survey,” on the Internet at

http://www.bls.gov/cps/cps_flows.htm (visited June 15, 2010). 

For an analysis of the most recent recession through 2008 relative 

to earlier recessions, see Harley Frazis and Randy Ilg, “Trends 

in labor force flows during recent recessions,” Monthly Labor Review, April 2009, pp. 3–18.

2 The date of the business cycle peak was determined by the 

National Bureau of Economic Research.

3 For this comparison we use a data series that smoothes 

out annual revisions to the population controls. See “Employment from the BLS household and payroll surveys: summary of 

recent trends,” on the Internet at http://www.bls.gov/web/empsit/ces_cps_trends.pdf (visited Apr. 15, 2010). Adjustments to 

population controls are not directly reflected in the flows shown 

in the charts. 4 As a proportion of the nonemployed (the unemployed plus 

those not in the labor force), the March level was only as high as 

early 2009 levels.

2007 has been marked by large increases in inflows 

to unemployment and outflows from employment. 

These series peaked in early-to-mid 2009 and have 

declined somewhat since then. The proportion of 

workers unemployed the previous month remaining 

unemployed increased through mid-to-late 2009 and 

has not declined as of June 2010. Flows into employment increased substantially in early 2010 for the first 

time since early 2007 but decreased in the second 

quarter of 2010. Both of these movements were due 

almost entirely to flows from the not-in-the-labor-force 

category rather than from unemployment.