Unemployed and Running Out of Hope

The new face of joblessness

Today, the unemployed sector cuts through a very broad cross-section of the country. Since late 2007, some 8 million jobs have vanished, and the end is not yet in sight. The ranks of the unemployed have now swelled to nearly 16 million people.

In the past, recessions have resulted primarily in blue-collar and low-level retail job losses, with white-collar layoffs accounting for only about 30 percent of total losses. By way of contrast, in the current downturn, nearly 50% of the vanished jobs have been managerial, professional, and skilled white-collar positions. For many upper-echelon workers who are scrambling for cash now, the current recession has changed the world overnight.

Who has been hardest hit?

In past recessions, minorities have been the hardest hit group, and that hasn’t changed. According to current Labor Department statistics, the nationwide unemployment rate in November was 10%, but joblessness among African-Americans, for example, was 15.5%. Interestingly, the unemployment rate among men is 11.9%, compared to 8.1% for women, the widest unemployment gender gap in more than half a century. Older workers are being laid off at a faster rate than younger workers.

Are unemployed people finding new jobs?

The unemployed are staying that way for unusually long stretches of time. Nearly 25% of  jobless persons have been unemployed for more than six months, the highest long-term unemployment level since the Great Depression. And that 25% long-term unemployment figure doesn’t include “discouraged workers” — people who have given up looking for work – and people who have settled for part-time work. In hard-hit regions of the country, long stretches of joblessness coincide with elevated suicide rates, mounting depression, and family conflicts.

But aren’t layoffs in a recession cyclical?

In most recessions, job losses result from temporary contractions of businesses that are producing more than the economy can absorb. The losses are therefore cyclical. Typically, businesses lay off employees until demand picks back up, and then start hiring again. The current economic downturn, however, is more foundational; that is, some industrial segments appear to have undergone permanent shrinkage – home construction, vehicle manufacturing, and newsprint publishing, for example.

New-home construction busts amid the housing crisis across the country have shifted many construction-worker families from affluence to poverty, or at best, survival mode. It’s difficult to believe that home construction industry will ever see boom years again.  For that matter, there’s no reason to suspect that vehicle manufacturing will ever return to a glorious era of unthinking tunnel vision, or that two-inch-thick newspapers will ever again grace the breakfast table of every American home.

How do long-term unemployed people get by?

They sell off cars, get rid of extra phones, cancel health club memberships, and bid vacations farewell. They scrounge for any income they can find. Most workers who qualify for unemployment pay receive about 60% of their former wages, but unless Congress extends their benefits, they expire after 26 weeks. But even unemployment benefit extensions eventually expire, at which point people may become eligible for welfare benefits and food stamps. A family of four might receive $900 per month, which won’t begin to cover such basic things as food, housing, and health care. From there, without family or friends to take up the slack, it’s a short step to soup kitchens and private charities. For manylong-term unemployed persons, the prospects are little better than grim.

Will new jobs ever be created?

It’s a question without an answer. Some politicians are eager to ramp up spending to salvage shrinking industries, but that’s more a bandage than a cure. And there is talk of replacing shrinking industries like vehicle manufacturing with “green” industries that will create a new economic boom, but turning such talk into reality would require billions in private or government investments as well as more years than today’s unemployed population can even hope to live. Not all displaced workers can learn new skills quickly. And even for those who can, chances are good that they won’t be returning to any semblance of their former pay. This is especially true for older workers or those who have extensive experience in specialized fields.

Will current job losses become permanent?

It is a sad thing to admit that many people who have lost jobs in the past year or two may never return to their former occupations or ever again reach their former income levels, but there seems to be no immediate way to avoid such a conclusion. Barring something truly unforeseeable, such as the creation of a whole new economy, we are likely to see an unprecedented recessionary shift toward permanent job losses.

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