Since it seems to be pretty much cooked in that there won't be more direct efforts to reduce the unemployment rate, I thought I'd write a quick diary on Don Peck's recent piece in the Atlantic. The main point is that a high unemployment rate today will be visible far into the future. Peck writes in the abstract:
The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.
A bit more on the flip.
Peck's piece is divided into three main sections: young people who may never get started; communities that may leave the primary economy and the associated normative social structures; and the culture just turning mean. I'll comment briefly on all of them. However, I recommend clicking and having a look at the whole thing.
Never getting going?
As a young-ish---when you cross 30 you get the "ish"---professional myself, I have a personal interest in this part, and have noted variously in this forum that the economy is somewhat predatory towards the young. For a long time, the solution was, essentially, excessive leverage at the beginning of your career to buy real estate at bloated prices from boomers.
Now the situation is even worse. Peck:
“Graduates’ first jobs have an inordinate impact on their career path and lifetime earnings,” wrote Austan Goolsbee, now a member of President Obama’s Council of Economic Advisers, in The New York Times in 2006. “People essentially cannot close the wage gap by working their way up the company hierarchy. While they may work their way up, the people who started above them do, too. They don’t catch up.” Recent research suggests that as much as two-thirds of real lifetime wage growth typically occurs in the first 10 years of a career. After that, as people start families and their career paths lengthen and solidify, jumping the tracks becomes harder.
Needless to say, the level of competition is, these days, pretty high. This particular background makes the varied musings on this topic from people safely ensconced in think tanks a little odd to me. (Confidential to M.Y. and C.M.: This is easier for you to say from your sinecure. The reality is that those on the outside looking in are likely to stay there as they become more disconnected from the current topics of interest.)
The ghetto moves to the outskirts?
If things aren't looking that good for the white-collar workers of the future, it's starting to get ugly in "traditional" blue collar communities. Peck interviews Kennedy School professor Kathryn Edin on the topic of my beloved urban hellhole:
Communities with large numbers of unmarried, jobless men take on an unsavory character over time. Edin’s research team spent part of last summer in Northeast and South Philadelphia, conducting in-depth interviews with residents. She says she was struck by what she saw: “These white working-class communities—once strong, vibrant, proud communities, often organized around big industries—they’re just in terrible straits. The social fabric of these places is just shredding. There’s little engagement in religious life, and the old civic organizations that people used to belong to are fading. Drugs have ravaged these communities, along with divorce, alcoholism, violence. I hang around these neighborhoods in South Philadelphia, and I think, ‘This is beginning to look like the black inner-city neighborhoods we’ve been studying for the past 20 years.’ When young men can’t transition into formal-sector jobs, they sell drugs and drink and do drugs. And it wreaks havoc on family life. They think, ‘Hey, if I’m 23 and I don’t have a baby, there’s something wrong with me.’ They’re following the pattern of their fathers in terms of the timing of childbearing, but they don’t have the jobs to support it. So their families are falling apart—and often spectacularly.”
The good news for the hellhole is that it's gaining population at the center. The bad news is that city's distress is just moving elsewhere---basically places without easy transit access to the "Eds and Meds" workplaces that power the economy these days.
Moreover, given the large footprint of the city, it's like to remain distressed for quite some time: gentrification won't save these places for a while, and the picture Edin is painting isn't one of people who are going to hold down a square job any time soon---if ever. We are going to need a new language to describe the outlying "inner-city". Public policy makers are going to have to learn to deal with poverty in car-suburbia.
Where to go from here?
Peck finishes up with a sobering summary:
A SLOWLY SINKING GENERATION; a remorseless assault on the identity of many men; the dissolution of families and the collapse of neighborhoods; a thinning veneer of national amity—the social legacies of the Great Recession are still being written, but their breadth and depth are immense. As problems, they are enormously complex, and their solutions will be equally so.
[ ... ]
At the very least, though, we should make the return to a more normal jobs environment an unflagging national priority. The stock market has rallied, the financial system has stabilized, and job losses have slowed; by the time you read this, the unemployment rate might be down a little. Yet the difference between “turning the corner” and a return to any sort of normalcy is vast.
[ ... ]
We have a civic—and indeed a moral—responsibility to do everything in our power to stop it now, before it gets even worse.
The bottom line is pretty simple: the US is looking at a situation where some large fraction of the population isn't really employable in the primary economy. This means persistently lower tax revenue and persistently higher incidence of various social problems, should it happen. Maybe propping up house and car prices shouldn't be the main concern of economic policy.