Economists have sometimes claimed that the reason that the labor market did not quickly clear during the Great Depression, was that wages were sticky-downward. The result of sticky-downward wages can be long-term high levels of unemployment.
(p. 7) Much as now, in the Great Depression people were very focused on maintaining a “fair wage” in the face of economic distress. But this led to nationwide resistance to nominal wage cuts for anyone, even when retail prices were falling rapidly.
This appears to have had the unintended result of inducing employers, who could not afford to keep everyone working at their former wages, to lay off many people. The economists Harold L. Cole of the University of Pennsylvania and Lee E. Ohanian, of U.C.L.A., have shown that this may explain some of the extreme duration of Great Depression unemployment.
For the full commentary, see:
(Note: the online version of the commentary has the date May 29, 2020 and has the title “ECONOMIC VIEW; Why We Can’t Foresee the Pandemic’s Long-Term Effects.”)
The Cole and Ohanian paper mentioned above, is:
Cole, Harold L., and Lee E. Ohanian. “New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis.” Journal of Political Economy 112, no. 4 (Aug. 2004): 779–816.