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.
Those are the words of the introductory blurb to an article in the current edition of The Atlantic, written by Don Peck, a Deputy Managing Editor, with the title How a New Jobless Era Will Transform America Reading it was a troubling way to begin my morning. It is possible that Peck's analysis is inaccurate, although I don't think so.
I teach young people, most of whom are now in 10th grade. That means in 6 years as they finish college most of them will be looking for jobs. And if Peck is correct, far too many will not be able to find them. That is why I am troubled.
Regular readers of Daily Kos know, thanks to Meteor Blades, that the usually cited figure for unemployment, U3, understates the reality of our current jobs crisis. It is only by combining that figure with U6, which Peck notes "people who want to work but have stopped actively searching for a job, along with those who want full-time jobs but can find only part-time work," that we get an accurate figure, one which as of October reached 17.6% nationally.
Several other statistics cited by Peck are also important to understanding that seriousness of the current situation.
As of late last year, the average length of unemployment reached 6 months, which as Peck notes last happened in 1948.
Last fall the lowest measure of unemployment for teenagers was over 27%
"44% of American families had experienced a job loss, a reduction in hours, or a pay cut in the past year."
Perhaps none of this is a surprise. After all, we are regularly hearing that the issue which matters most is jobs, followed by jobs, then followed by jobs.
Yesterday I wrote about unemployment, using as a starting point Bob Herbert's column, which examines how umeployment fell more heavily on those whose income was lower to begin with. As bad as that is, Peck is warning about something worse - a persistent situation in which an average length of 6 months might seem like a blessing, in which increasingly those entering the job market will not find opportunities commensurate with the education and training they have received, where their choice may be a job at Walmart or Mickey D's or nothing, where people in their late 20s might have to move back in with their parents or never be able to move out.
Officially our current rate of unemployment is just under 10%. We have, over recent decades, come to view a 5% rate of unemployment as normal, as equivalent to full employment, perhaps believing that it represented a temporary status as businesses moved or failed, the jobs that disappeared therefrom being replace by other jobs in other companies. Yes, it is true, that during the Reagan administration the definition of unemployment was changed to somewhat mask what was already happening, a transformation of the American economy in which increasing numbers of workers were being left out. Still, our method of calcuclating the base U3 has remained relatively constant for well over two decades, during the presidencies of Reagan, two Bushes, and Clinton, before the current administration took office less than 13 months ago.
Most recessions end when people start spending again, but for the foreseeable future, U.S. consumer demand is unlikely to propel strong economic growth. As of November, one in seven mortgages was delinquent, up from one in 10 a year earlier. As many as one in four houses may now be underwater, and the ratio of household debt to GDP, about 65 percent in the mid-1990s, is roughly 100 percent today. It is not merely animal spirits that are keeping people from spending freely (though those spirits are dour). Heavy debt and large losses of wealth have forced spending onto a lower path.
What if people are too insecure to start spending? So far, despite some stabilization of the financial sector and the apparent recovery of the stock markets, consumer spending has not fully recovered. Yes, we can read about the good signs of increases for 3 months in a row, of supposed 5.7% economic growth, but these are occurring on a base that was still lower than before the economic crisis exploded in late 2008.
Look at it another way. Last month we lost 20,000 jobs. To merely meet the increase in our working age population, we would need about 125,000 additional jobs each month. Then remember this, that until recently we were seeing job losses well over half a million per month, sometimes over 700,000. And Peck warns us
Even if the economy were to immediately begin producing 600,000 jobs a month—more than double the pace of the mid-to-late 1990s, when job growth was strong—it would take roughly two years to dig ourselves out of the hole we’re in. The economy could add jobs that fast, or even faster—job growth is theoretically limited only by labor supply, and a lot more labor is sitting idle today than usual. But the U.S. hasn’t seen that pace of sustained employment growth in more than 30 years. And given the particulars of this recession, matching idle workers with new jobs—even once economic growth picks up—seems likely to be a particularly slow and challenging process.
I am not an economist, and claim no special knowledge about the economic of job creation or job retention. I have some awareness of the impact of joblessness, particularly as it is extended. For myself, the longest I have ever been without a job when actively seeking one was about 4 months. As a young adult I saw my father go better than a year without steady employment, eventually creating a consulting business which enabled him not only to survive but to thrive, but only after the debilitating effect of being turned down because of his age (he was over 50). He was able to get by because he had, being someone who had lived through the Depression, carefully saved and invested and had the assets to carry him through that period. He was also no longer burdened with expenses for either of his children - we were both employed and able to take care of ourselves, although each of us later would experience periods of no income, in my case usually by choice such as when I went back to Haverford in '71 to finish my education. Many losing jobs or unable to find a first job either already family obligations, or may not be able to form a family.
It’s likely, then, that for the next several years or more, the jobs environment will more closely resemble today’s environment than that of 2006 or 2007—or for that matter, the environment to which we were accustomed for a generation. Heidi Shierholz, an economist at the Economic Policy Institute, notes that if the recovery follows the same basic path as the last two (in 1991 and 2001), unemployment will stand at roughly 8 percent in 2014.
"We haven’t seen anything like this before: a really deep recession combined with a really extended period, maybe as much as eight years, all told, of highly elevated unemployment," Shierholz told me. "We’re about to see a big national experiment on stress."
I have written about beginning to see signs of that stress among my students. Some are restricting college plans based solely on the economic situations in which their families find themselves. Some no longer have medical insurance, or perhaps they do through SCHIP as their parents "go naked." Increasing numbers have to work part time to help the family meet basic needs and to save for college, not merely to cover the costs of owning an operating a vehicle - a decreasing percentage do that, which is evident in a slight decrease in the number of students who drive themselves to school.
But in fact a whole generation of young adults is likely to see its life chances permanently diminished by this recession. Lisa Kahn, an economist at Yale, has studied the impact of recessions on the lifetime earnings of young workers. In one recent study, she followed the career paths of white men who graduated from college between 1979 and 1989. She found that, all else equal, for every one-percentage-point increase in the national unemployment rate, the starting income of new graduates fell by as much as 7 percent; the unluckiest graduates of the decade, who emerged into the teeth of the 1981–82 recession, made roughly 25 percent less in their first year than graduates who stepped into boom times.
But what’s truly remarkable is the persistence of the earnings gap. Five, 10, 15 years after graduation, after untold promotions and career changes spanning booms and busts, the unlucky graduates never closed the gap. Seventeen years after graduation, those who had entered the workforce during inhospitable times were still earning 10 percent less on average than those who had emerged into a more bountiful climate. When you add up all the earnings losses over the years, Kahn says, it’s as if the lucky graduates had been given a gift of about $100,000, adjusted for inflation, immediately upon graduation—or, alternatively, as if the unlucky ones had been saddled with a debt of the same size.
Kahn's figures are for white male graduates. We know the situation is always worse for minorities, male and female. And then consider this paragraph from Peck:
The weight of this recession has fallen most heavily upon men, who’ve suffered roughly three-quarters of the 8 million job losses since the beginning of 2008. Male-dominated industries (construction, finance, manufacturing) have been particularly hard-hit, while sectors that disproportionately employ women (education, health care) have held up relatively well. In November, 19.4 percent of all men in their prime working years, 25 to 54, did not have jobs, the highest figure since the Bureau of Labor Statistics began tracking the statistic in 1948. At the time of this writing, it looks possible that within the next few months, for the first time in U.S. history, women will hold a majority of the country’s jobs.
19.4 percent of all men in their prime working years, 25 to 54
three-quarters of the 8 million job losses since the beginning of 2008
Remember that the figures are as of when Peck wrote this piece at the end of last year.
I read this piece, which has much more of value, attempting to understand the impact of our current - and likely future - economic situation upon the young people whose lives so intertwine with my own. In general students in their middle teens are very optimistic. What happens if they start to lose that optimism, as friends and neighbors but a few years old begin to feel the impact of our changing economic situation? What is the impact if an older sibling moves back home, or never can afford to move out? How might that affect their own thinking about their future?
We tell our students to get educated for a future. What if the real world as experienced by friends and family says that future is increasingly bleak? How many will make the investment of time, energy, emotion, to prepare themselves for jobs and careers that seem to be disappearing even before they can embark on them?
The stresses on families - particular hard on those in the working class. And then there is this:
Many children are already suffering in this recession, for a variety of reasons. Among poor families, nutrition can be inadequate in hard times, hampering children’s mental and physical development. And regardless of social class, the stresses and distractions that afflict unemployed parents also afflict their kids, who are more likely to repeat a grade in school, and who on average earn less as adults. Children with unemployed fathers seem particularly vulnerable to psychological problems.
I see some of that, especially among those of my students whose family background is working class or lower middle class. But I also see some impact on families with two college-educated parents where the father has lost his job. The stress they are experiencing is palpable, and while some overcome others are distracted and unfocused on schoolwork.
In New York City, 18 percent of low-income blacks and 26 percent of low-income Hispanics reported having lost their job as a result of the recession in a July survey by the Community Service Society. More still had had their hours or wages reduced. About one in seven low-income New Yorkers often skipped meals in 2009 to save money, and one in five had had the gas, electricity, or telephone turned off.
It is winter. Some around DC lost heat in the last storm, more still will in this. We read of families checking in to hotels to get through when they lack power and heat. What if the reason your heat is off is you cannot pay the bill? Right now there are temporary warming centers. But other than in a storm?
Believe me, I know about the phones. When I have to call home because of a behavior or academic problem with one of my students, about 20% of the time the phone number listed is not in service. Some of that may not be related to economic stress such as unemployment, but increasingly the reason for lack of phone service is economic. And from my experience that strongly correlates with difficulties in the school setting, academic and behavioral.
Normally income inequality decreases during tough economic times. During our current crisis it has been exacerbated. Politically, we are seeing the impact in several ways. One is the Tea Party movement, which regardless of other reasons such as racism that are playing a part, is fueled by fear of what may happen economically. Another is dropping participation in political processes. Obama benefited greatly in 2008 because people had a sense of hope. If the changes in government people desperately want and need are not forthcoming, if the perception is that their needs are being ignored for other priorities - even if it were necessary to first prop up the financial system - people lose motivation to vote: why bother when even those elected with one's support seem unable or unwilling to affect the changes so desperately needed?
The final section of Peck's piece begins
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.
The stimulus was too small, and its effects are disappearing. We need jobs, yet what seems likely to come out of Congress will be less than $100 billion, perhaps in the $80 billion range. That might produce an additional 700-800,000 jobs, not enough to make a difference.
Peck's final paragraph acknowledges the difficulties we face, but is straightforward on the need to act forcefully:
We are in a very deep hole, and we’ve been in it for a relatively long time already. Concerns over deficits are understandable, but in these times, our bias should be toward doing too much rather than doing too little. That implies some small risk to the government’s ability to continue borrowing in the future; and it implies somewhat higher taxes in the future too. But that seems a trade worth making. We are living through a slow-motion social catastrophe, one that could stain our culture and weaken our nation for many, many years to come. We have a civic—and indeed a moral—responsibility to do everything in our power to stop it now, before it gets even worse.
a slow-motion social catastrophe
a civic—and indeed a moral—responsibility
everything in our power
before it gets even worse
For the sake of the families being destroyed as Congress dithers
. . .
For the sake of the children whose dreams and hopes are being erased. . .
For the sake of democracy, which will not survive if we find ourselves in a situation where more than 1 in ten remain either un- or under-employed for extended periods of time. . .
For those who may have jobs now, but whose jobs will begin to disappear, or whose income will diminish, if we do not right our economic ship of state . . .
For all of us . . .
Otherwise, our future is clear. It will be a new jobless era for far too many. Quite probably including some who read this, and certainly some of their offspring.
?Peace?