Social Change in the Wake of the U.S. Recession

(September 2009) Between 2007 and 2008, U.S. household income fell sharply as the unemployment rate increased. By the end of this year, more than one in 10 people are projected to be looking for work. New data from the U.S. Census Bureau’s American Community Survey (ACS) show that the recession’s effects may have gone beyond employment and income, potentially affecting homeownership rates, commuting patterns, marriage rates, and migration trends.

Selected Estimates for the U.S. Population, 2007-2008 (percent)

Note: Estimates are subject to both sampling and nonsampling error. All comparisons are statistically significant at the 90 percent confidence level.
Source: PRB analysis of the 2007 and 2008 American Community Surveys.

Median home values dropped sharply in 2008—to about $198,000—after a steady rise from 2000 through 2007. Homeownership has traditionally been the major source of wealth accumulation in the United States. But in recent years, owning a home has become a liability for many families. As property values plummeted, fewer people were able to sell their homes. Foreclosures hit record levels, and many families became trapped in unaffordable subprime mortgages. Between 2007 and 2008 the homeownership rate dropped more than half a percentage point, to 66.6 percent, the lowest level since 2002.

Blacks, who have been disproportionately affected by foreclosures, experienced a big drop in homeownership, from 46.5 percent to 45.6 percent. However, the rate for also Asians dropped sharply, from 60.7 percent to 59.4 percent, while the rate for non-Hispanic whites also fell from 73.8 percent to 73.4 percent. As homeownership rates dropped, there was a concurrent increase in the number of people living in crowded housing units (more than 1.5 persons per room). This suggests that more people are “doubling up” with relatives or friends either out of necessity or to save money.

Migration, which is closely tied to job opportunities, has also slowed. The percentage of people who moved to a different house in the United States dropped from its recent peak of 16 percent in 2006 to 15 percent in 2008. Between 2007 and 2008, the number of people moving fell by nearly 800,000. Most long-distance moves are linked to job opportunities, so when job losses mount, more people stay where they are. High rates of homeownership can also lead to lower migration rates if families are unable to sell their homes.¹

About 75 percent of the workforce still drives alone to work each day, but the share has dropped significantly since peaking at 78 percent in 2003-2004. In 2008, more than one-fifth of workers (20.4 percent) used carpools, public transportation, and other means to get to work.²

Recessions can also affect family relationships. Previous research has shown that during past recessions, rising unemployment rates have had a modest, positive impact on divorce rates.³ Other couples may delay getting married until they feel more comfortable about their economic prospects. Since the early part of the decade, the share of the population that has never married increased by four percentage points, from 27 percent to 31 percent.

The new ACS data, based on information collected in 2008, do not capture the full weight of the recession but they give us a first look at how families are coping with the new economic reality. The 2009-2010 ACS estimates will tell us if these trends have continued or if families are returning to business as usual as the recession winds down.

Mark Mather is associate vice president, Domestic Programs, at the Population Reference Bureau.

References

1. David Bernstein, “The Impact of Home Ownership on Mobility and Labor Market Outcomes: Evidence From the Current Population Survey (2005 to 2008),” accessed online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1414461, on Sept. 18, 2009.
2. Another 4 percent of workers telecommuted, a figure that was unchanged from 2007.
3. Scott South, “Economic Conditions and the Divorce Rate: A Time-Series Analysis of Postwar United States,” Journal of Marriage and the Family 47, no.1 (1985): 31-41.