Long-term unemployment remains virtually unchanged in economic recovery
Before the birth of her fourth child, Keron Bartholomew decided she needed to be near her family in Orlando, Florida. Her partner, Fernando Bogle, was still in college in New York, and was hoping to become a pharmacist. He planned to join them when he graduated. But within a year of her move in 2009, Keron had lost her job. Bogle left school to find a job, but couldn’t, and by the end of the year the family was homeless. “It’s been a rat race ever since,” said Bogle.
Since Bartholomew, 30, lost her job at Orlando airport in November 2009 she says she’s spent most days looking for a new one. Bogle, 28, eventually found work at Publix, an employee-owned supermarket chain, but money is short and he is looking for a second one. He has put his studies on hold. “Someone needed to provide. To buy milk and cereal,” he says.
When the US Labor Department releases its latest monthly jobs figures on Friday morning, all eyes will be on the headline number. Rightly or wrongly, with the 2012 election looming the jobs figures have become a monthly report card on Obama’s economic policy. Last month they were disappointing, but still positive. With the focus on jobs growth, or the lack of it, the plight of the long-term unemployed is getting ignored.
According to the official measures in March there were 5.3 million long-term unemployed (those jobless for 27 weeks and over) – essentially unchanged from February and accounting for 42.5% of the unemployed.
But that figure under-represents what is going on in the labour market. Another 7.7 million people were working part-time because they couldn’t find full-time work, and another 2.4 million didn’t count because they had stopped looking for work.
Stock markets are recovering. After two years of pay cuts, America’s CEOs are back in the money. Meanwhile, life for those at the bottom of the pay scale has just gotten steadily worse. And for Obama, the sense that the recovery is not reaching ordinary Americans could prove the strongest challenge to his chances of a second term in the White House.
The Bartholomews spent close to two years living on people’s floors; Bogle spent time living in his car. Last year they got a place at the Coalition For the Homeless of Central Florida shelter in Orlando, where they found there were many others in their situation – families who have found this economic recovery too fragile to support them. This week there were 786 people in Coalition’s shelter, including 127 families and 287 children, whose average age was eight. The shelter was the last place they wanted to be. “In the end we had to face the facts, we weren’t staying with friends, we were homeless,” said Bogle. But the childcare the centre provides has proved a turning point. Bartholomew is on her third round of interviews for a local fast food restaurant and is hopeful she has got it.
“We are seeing more and more families,” said Brent Trotter, Coalition’s president. The impact of long-term unemployment is devastating for families, he said. “Only a recovery in the jobs market is going to sort this out,” he said.
But while he said businesses were telling him the economy was improving, they still aren’t hiring enough people to dig families out of their problems. “For those looking for work, it’s very, very bleak.”
As the US continues to add jobs, albeit slowly, the long-term unemployed are being left behind.
According to the labour department, people who have been unemployed fewer than five weeks face a re-employment rate of 31%. If you are unemployed for more than a year, there’s just a 9% chance you’ll find work.
In Florida, and in other states, some companies will only recruit people who already have jobs. Bartholomew says the length of her unemployment is a huge stumbling block in interviews. “You can see them wondering what’s wrong with me,” she says. “But it’s not like I haven’t been looking.”
Academic studies have linked spells of long-term unemployment to lower wages decades after their displacement. Long-term unemployment hits people’s health, shortening life spans, knocking up to 18 months of a person’s life, according to one study from Columbia University.
At the start of the downturn this was a “man-cession”: manufacturingjobs and then white-collar male employees were hit hardest first. More recently, women have been affected, as the government cut backs have hit them harder and women have found themselves competing with men in traditionally female-dominated industries like healthcare.
A recent report from the Brookings Institute found that the make-up of this downturn is not “unprecedented”, as many have claimed. The vulnerable groups – black men, Latino women, single mothers, older people – have been hit as they have in previous recessions. What is different is the scale of the problems that the long-term unemployed face.
The long-term unemployment rate hit a high of 26% in June 1983. But jobs growth roared back after the early 1980s recession and wiped out long-term unemployment.
This time, with the rate at 40% and the recovery in the jobs market still fragile, the long-term unemployed are being left behind. “This recession has been over for years. Officially it started in December 2007 and ended in the Summer of 2009, and yet three years later we have unemployment over 8%,” said John Schmitt at the Center for Economic and Policy Research.
Some commentators have claimed that the US is going through a structural shift and that unskilled workers are being left behind. Schmitt disagrees.
If there was a shortage of skilled workers, those skilled workers would be enjoying a bidding war for their services. If it was about education, graduates wouldn’t be suffering so badly, he says.
Schmitt points to a Washington Post headline from 1935: “Skilled workmen in demand despite vast unemployment.” The subheading read: “Technological progress has been so rapid during the depression that welders and other experts, idle since 1929, are outmoded.”
It wasn’t true then and it isn’t true now, Schmitt said.
If he’s right, the truth about America’s long-term unemployment may be more mundane, but in many ways more horrific. There is very little that can be done for the long-term unemployed until the economy starts to recover. The US needs to create about 100,000 jobs a month to stand still and is about 10 million jobs down from where it was before the recession. On current trends it could take until the 2020s for unemployment to get back to 6-7%, a level that the Federal Reserve considers “normal”. And the ones who are most likely to be last to get jobs are the ones who have been out of work the longest.
‘I’d go to a lot of places and they’d tell me I was over-qualified’
The plight of the long-term unemployed sparked the rise of its own protest group in 2010. The 99ers, named after those who had exhausted their 99 weeks of insurance benefits that they can claim, briefly became a hot political topic – hot enough to attract the ire of rightwing media stars like Glenn Beck, Rush Limbaugh and would-be presidential candidate Newt Gingrich. “It is fundamentally wrong to give people money for 99 weeks for doing nothing,” Gingrich told a Republican debate in Orlando.
No one talks about the 99ers now, says Jim Eichelberg, who still helps coordinate its Chicago chapter. Eichelberg is a former 99er but technically he is now no longer unemployed. A qualified mechanic, he works three days a week cooking and cleaning up at Doyle’s Pub, a local bar near his home in Richmond, Illinois, for $8.25 an hour. It’s all he can find.
“You mention 99ers today and people say ‘what?'”, he said. “The Hunger Games brought in $1.3bn in three weeks. This nation just wants to be entertained.”
Eichelberg, 54, worked on a farm until he was 40. He’d always worked with engines, and when the farm was sold he decided he’d better get a qualification to prove his expertise. He got a certification in automotive technology at a local college and found a job at Buell, the motorcycle company. After 9/11, the recession bit and he was laid off. Suddenly, he found his qualification was working against him. “I’d go to a lot of places and they’d tell me I was over-qualified, that I’d get bored. So what! I don’t mind. Just hire me,” he says. “What are you people looking for?”
He keeps looking for work but feels his age is working against him. “I walk in with this salt-and-pepper beard and I think they look at me and think: no,” he said. “All the politicians say is that jobs are being created, that we created 120,000 jobs last month. Divide that over 50 states.”
More than that, argues Betsey Stevenson, professor of business and public policy at Wharton business school, the US has been creating fewer jobs even in the good times.
“In the 1990s under Clinton we were adding 300,000 jobs a month. We had very poor jobs growth under Bush,” she said. “The ratio of employed people to the population has been trending down since 2000.”
Stevenson said the hangover from the so-called “jobless recovery” after the previous recession and the depth of this recession had combined to leave a worrying legacy for the long-term unemployed.
“We are very much in danger of creating a large group of people who are never able to fully recover from this,” she said.
Stevenson has some direct knowledge of this. Her father, a pilot, has been unemployed for three years. Let go at age 60, he was not emotionally or financially ready for retirement. Officially he drops out of the long-term unemployment numbers because sometimes Stevenson hires him as a childminder. Like countless others he will not get counted in Friday’s jobs report.
Richard Chaifetz, founder and chairman of ComPsych, the world’s largest provider of employee assistance programs, said unemployment was always a handicap for those seeking work, but never more so than in a recession.
“This is a buyers’ market,” he said. “Employers can choose who they want and they assume that those people who are in work are more attractive prospective hires than those who are not.”
And there is a benefit for employers who choose people in jobs, he said. “You have a verifiable track record. And in this job market, where you can readily replace a lot of your people, employers can assume that those people with jobs are good employees.”
For those without jobs, unemployment become a stigma that becomes increasingly hard to shift, he said. “There is a direct relationship between the time you are out of work and the amount of time it takes to find a job,” he said.
Chaifetz said unemployment was “psychologically devastating” and saps the confidence of those affected. “The longer it goes on, the more difficult things become,” he said.
Chaifetz best advice for job seekers? Don’t get unemployed in the first place.
[Young woman looking for a job via Elena Elisseeva / Shutterstock]