rssLong-Term Job Losses Demand Large-Scale Fix
Monday, November 23, 2009 at 6:00 am
- 21 Comments
While the national unemployment rate of 10.2 percent is a sobering reminder of the depth of this recession and the protracted timeline a recovery will take, the challenges posed by long-term unemployment are far greater.
“We are breaking every record post-Great Depression on long-term unemployment,” said Heidi Shierholz, an economist with the Economic Policy Institute. Right now, around 35 percent of those without jobs have been unemployed for more than six months, a figure that adds up to 3.6 percent of our country’s labor pool.
[Economy]The result is a crisis unlike anything seen since the 1930s. “The numbers are unprecedented,” said John Challenger, CEO of Challenger, Gray & Christmas, a human resources consulting firm. “What it suggests and it bears out in reality is that as people become long-term unemployed, they become damaged goods in the job market.”
While economists are divided about the best way to combat this growing problem, most agree on how it happened. The current recession exacerbated an ongoing economic shift from manufacturing to a service base. Troubles faced by Detroit’s Big Three automakers fanned the flames, rendering the skills of many workers obsolete. Even as local economies withered on the vine, workers were rendered immobile, locked into their homes by the real estate crash.
Long-term unemployment is dangerous because it can have a snowball effect, says Kevin Lowden, managing economist at the Milken Institute. The longer someone is out of work, the more likely he or she is to default on his or her mortgage, even low-risk borrowers at the time when the loan was originated.
“You also see significant issues in terms of the effect on consumer demand due to the dramatic increase in savings rate,” he said. While this increase in savings is good for the economy long-term, right now that frugality comes at the expense of consumer spending that could lead to employers hiring more workers.
This epidemic of long-term unemployment also puts an added burden on government coffers. “This is direct drain on budgets in two ways,” said Dean Baker, co-director of the Center for Economic and Policy Research. Government doesn’t collect income tax on laid-off employees, and when these workers go onto unemployment or disability rolls, this creates an additional drain on the system.
For instance, the increase in workers applying for disability has shot up. Currently, some 7 million adults are on disability, an influx so overwhelming that the trustees of the Social Security program predict that the disability fund will be emptied by 2017 if nothing changes.
This mass migration to disability status is primarily a function of our employer-based health care system, according to Lawrence Katz, a professor at Harvard University. “If you have a pre-existing condition, even if you get another job there will be problems with your coverage,” he said. “The one place you can go is disability, where you get onto Medicare. And once they go on, they basically never come off.” Health plans currently under debate in Congress would subsidize low-income citizens and families, which would include the unemployed, as well as ban insurers from eliminating pre-existing conditions, which make going off disability feasible. Currently, those jobless for a long period of time have nothing to fall back on after their COBRA benefit expires.
Even if those who have been unemployed long-term make it back into the workforce, their future earning power suffers. There’s some evidence that post-layoff retraining can mitigate this, but only under certain circumstances. A study out of the University of Chicago’s Harris School of Public Policy Studies found that attending one year of community college gave displaced workers a 5 percent wage boost. Unfortunately, the vast majority of workers enrolled in such programs don’t stick around for even a semester, let alone a whole year.
However, for workers that stick it out and specialize in vocational training, science or mathematics, the returns can be even greater. The study’s authors found a 10 to 15 percent jump in wages for this subset of workers, as well as higher returns for those who already had some degree of college education prior to their participation in the program.
To this end, much of the work that is being done to combat long-term unemployment focuses on retraining workers so that their skills are more in alignment with today’s service-based economy. “The economy has changed fundamentally and our workforce system has not,” said Andy Levin, Michigan’s chief workforce officer, who runs that state’s No Worker Left Behind program. “Most people who lose their jobs can’t replace their standard of living without getting significant training because of the rapid and ongoing march of technology and globalization,” Levin said.
No Worker Left Behind began operating in August 2007 and is funded primarily by the Workforce Investment Act, which was created in the 90s and received $1.25 billion in stimulus funding to help dislocated workers. Since then, No Worker Left Behind has trained 102,000 at-risk or jobless Michigan residents for jobs in growing industries like health care, technology and transportation.
Levin has put into place bureaucratic efficiencies, such as standardizing which types of jobs are eligible for training subsidies throughout the state and streamlining the process that lets jobless workers continue to receive unemployment benefits while pursuing additional education. When the program conducted a survey this April, they found that nearly half of the workers who had completed training had landed a job, 86 percent in a field that related to their training.
Other economists say that programs such as No Worker Left Behind, while helpful, don’t do enough to address the root of the problem: the overwhelming lack of jobs. Although the pace at which companies are laying off workers has slowed, companies aren’t rehiring, which means there are still too few jobs to go around. Traditionally, small businesses are the first to hire when the economy picks up steam after a recession; however, small-business financing has dried up due to the credit crunch, preventing entrepreneurs from expanding and adding employees.
“The crisis is just so big at this point with 10.2 percent unemployment that we’re thinking about new direct job creation proposals because the scale of the problem is so large,” said Allegra Baider, senior legislative associate at the Center for Community Change. That group, along with a host of other advocacy and labor organizations, recently released a joint statement calling for new investment in job creation in fields such as infrastructure and education.
“A top priority ahead of job training is we’ve got to fix the labor market and start generating jobs,” said the Economic Policy Institute’s Heidi Shierholz. The Obama administration plans to hold a jobs summit next month examining incentives like tax credits to encourage businesses to hire new workers.
John Challenger of Challenger, Gray & Christmas acknowledged that even if such programs succeed, many Americans will have to make adjustments. “One of the things that’s happening is a steady career at one large company or in a company town is no longer available, and people at all levels can no longer think of their careers as always progressing upwards in income.” Even as they learn new skills, employees also have to be taught how to be flexible so they can adapt to the twists and turns of the 21st-century economy.
21 Comments
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Comment posted November 23, 2009 @ 10:06 am
all this blathering about “savings” vs “spending” what the heck does buying products made in chingchang land and other 3rd world cheap dumps do for employment of large numbers of US workers? nothing new in this article and poorly written !
Comment posted November 23, 2009 @ 10:55 am
I agree with Chris, this article, and others does nothing but distract from the real problem.
Its is not rocket science. The jobs are not coming back and no one, even Obama, is talking about them coming back.
They have already been outsourced, offshored, displaced, moved to another country, too many visas and this, all in the name of WORLD TRADE. Like it?
Its very simple: American corporations are interested in the TAXES of the American worker, in the form of subsidies and bailouts, and in America's ability to buy trinkets from them, but THEY NO LONGER CONSIDER THEMSELVES AMERICAN CORPORATIONS.
THEY ARE ON THE WORLD MARKET, AND GET THEIR WORKFORCE FROM WHEREVER THEY WANT with no regard for the welfare of Americans, the American family, the American worker, the American student or American children. They are, in fact, traitors.
This will not change until the trade deals are returned to normal and fair, and Hopeychange and the congressional crooks will never do that.
But, these trade deals will slowly bring down our cities, our local businesses, education, health care and everything else. It has also ruined other countries, especially central American ones.
Comment posted November 23, 2009 @ 12:39 pm
CHRIS I AGREE THIS ARTICLE READS LIKE VCR INSRUCTIONS DOES ANY BODY REMEMBER THOSE INSTUCTION BOOKS WHEN THEY FIRST CAME OUT NO MATTER HOW MANY TIMES U READ IT IT MAKES NO SENSE KIND OF LIKE WASHINGTON SENATORS HUH?
Comment posted November 23, 2009 @ 1:15 pm
“To this end, much of the work that is being done to combat long-term unemployment focuses on retraining workers so that their skills are more in alignment with today’s service-based economy.”
Ms. White are you living in this universe? service jobs by the boat load are being sent out of this country every day by the greedy Tarp Welfare Queen Multinationals !
Comment posted November 23, 2009 @ 7:05 pm
For the unemployed over 50 worker healthcare is a near term crisis (until its fixed assmming the lobbyists do not prevail) and finding work again after being displaced is a long term problem.
Most of the recovery to date is based on increased earnings by banks and companies who have laid off workers to increase their profitabiity, or have benefitted from taxpayer subsidies which cannot go on forever. Its a jobless recovery for US workers, and the taxpayer investments by large have been funneled into large executive salaries and bonuses, not into jobs for the people. When jobs do return, its highly unlikly that they will return to US workers, especially the displaced workers over 50.
The solution is for tax incentives for business to hire displaced US workers, and for regulation to prevent the funneling ot taxpayer money into executive salaries and bonuses, but rather into long term job creation.
Affordable healthcare is essential for everything to funciton once again. There needs to be reform both in the insurance industry which operates as an unregulated monopoly in most states, and there needs to be reform in the malpractice indusrty, where malpractice is replaced by arbitation, and reasonable schedule of settlements for those harmed, plus a directory listing the settlements to keep a check on those doctors and institutions who deliver quality at an affordable price.
This reform can all be handled in a way like it is handled in the Netherlands by the Dutch, where highly regulated private insurers who compete based on quality and cost (value) in return for access to the markets, Its not rocket science, but its not happening due to lobbyists and special interests working to preserve their windfalls. Elect those who enact meaningful reforms and work for the people and not for special interests.
Comment posted November 25, 2009 @ 6:35 pm
HAPPY THANKSGIVING, NOT FOR MILLIONS!!
[Will Rogers on Thanksgiving]
Now, Will Rogers, wrote on [November 26th, 1931], and we quote, Some of the writers are having a little trouble scraping up a reason for Thanksgiving this year, Some think we ought to skip a year and put on a big one in ’31. The original idea of the day was to give thanks for the “bountiful harvest.” Well the “bountiful harvest” is the very thing that’s the matter with us: too much wheat, too much corn, too much cotton, too much beef, too much production of everything. So we are going through a unique experience. We are the first nation to stave to death in a storehouse that’s overfilled with everything we want. And, here end’s the quote.
[8M Bums, Floosies and Urchins]
And, what has changed, well the production part, as old Bubba managed to ship all the production, out of the country to Brazil, the Peoples Republic of China, India, Japan, just about every corner of the Globe, under the [NAFTA] North Atlantic Free Trade Association, Americans were over worked any way, never taking a vacation, and whatnot. So, now we have [8M] Eight Million taking street vacations, but of course we know that all those Hooreville,[ A reference to the Great Depression Tent Cities across the country, named after Herbert Hoover], lazy good for nothings are just a bunch of drug using, alcohol addicted bums, hobo’s and floosies who like living on the street, in homeless shelters, or in Hooverville’s across the country with their herd of fatherless street urchins., [8M] Eight Million, of them.
[Stan Laurel Democratic and Oliver Hardy Republicans]
So, we have [8M] Eight-Million on the streets, [10.2%] Ten-Point-Two percent Unemployment on the books, with that number doubled [20.4] Twenty-Point-Four, with the off the books, under-employed, fired [to save companies from paying unemployment benefits], and each and every American from birth to after death with inheritance tax, owing [$80T/€53.4T] Eight-Thousand Dollars / Fifty-Three-Point-Four Euros each and that debt is rising daily. Now, all Democratic and Republicans should be truly happy with themselves for having not only brought us back to the good old days, but the great old movies Stan Laurel and Oliver Hardy, This is another fine mess you’ve got’ ten us into, we hope the Healthcare Bill will have a prescription for jobs, shelter and food, but that may be a little to much to hope for. Hey buddy can you spare a ten spot, a dime isn’t what it use to be any more, but those street people are just looking for a free handout, at least they live in the land of the over-taxed, under-employed, and under-feed, under-housed, and soon under pressure to take things in their own hands to change the Stan Laurel Democratic and Oliver Hardy, government that got them into this mess, back to the future, a [2009] version of [1931].
A HAPPY THANKSGIVING FOR ONLY SOME, IN THE LAND OF THE FREE, HEY BUDDY CAN YOU SPARE A TEN SPOT?
HERCULE TRIATHLON SAVINIEN
HARD-CORE INDEPENDENT TEA-BAGGER
Comment posted December 2, 2009 @ 5:44 pm
IS ANYONE OUT THERE FROM FLORIDA? I WAS ON THE PHONE AGAIN TODAY AND THE UI OFFICE SUPERVISOR NOW IS TELLING ME NOTHING UNTILAFTER CHRISTMAS IS THIS UNBELIEVABLE!!!!!! HOW CAN OTHER STATES ALL BE COLLECTING ALREADY ITS A MONTH SINCE IT PASSED FOR GODS SAKE WE GOT NO LETTERS THERE IS NO APPLICATION ANYWHERE ONLINE AND THE SENATE HAS DONE NOTHING ABOUT EXTENDING THE DATE FROM THE 27TH OF DEC THEY GO ON BREAK UNTIL AFTER NEW YEARS ON THE 20TH AND THEIR AGENDA IS PACKED WITH HEALTH CARE DEBATE AND VOTES, HARRY REID SAYS HE KNOWS ABOUT TEH SITUATION DOES ANYONE KNOW WHAT TEHY HAVE TO DO TO EXTEND THIS INTO NEXT YEAR? AS WE ARE GOING IN FLORIDA WE MIGHT NOT EVEN HAVE OUR LETTERS OR APPLICATIONS UNTIL THE 27TH OR DEC THEN WHAT IM FREAKIN OUT SOMEONE ANYONE WHO KNOWS PLEASE LET ME KNOW ASAP THANKS ANGIE
Comment posted December 3, 2009 @ 2:53 pm
Hey, NO HOPE Obama–
I realize you will not consider these points, since you are only interested in corporate American and your cronies, but here is some advice for you… Instead of blaming our kids, small business, and everyone else under the sun, for the lack of jobs, why don't you JUST ADMIT THE TRUTH, IF THAT IS AT ALL POSSIBLE?
You and your cronies stole American jobs with NAFTA, CAFTA, WTO and all your “plans” for unrestrained, “no borders” corporatism, THAT IS NOW FUELED BY AMERICAN TAXPAYER DOLLARS.
You stole American jobs when you decided it was YOUR RIGHT to increase VISAs to the point of becoming ridiculous. No other country does this.
You stole American jobs when you accepted illegal immigration as normal, resulting in 9 million undocumented workers and their families, who live in fear, pain and sickness so that our now-multinational corporations can soar on the stock exchange. No countries, even “THIRD-WORLD” countries allow this.
You stole American jobs when you bailed out every corporation under the sun, and then looked the other way as they immediately offshored and outsourced most of the jobs that were left. Yeah, we all saw that. You must have been in a drug stupor.
You stole American jobs when you decided to let airlines and other vital entities to go bankrupt in order to rid themselves of labor unions and fair, professional pay.
You stole American jobs when you let American corporations shed their “American” status, becoming offshored entities responsible to no one, yet still receiving subsidies from the American taxpayer and most likely abusing people in their newfound environment.
Bill Clinton is responsible for much of this so Hillary would have done just as bad.
You continue to steal American jobs when your so-called “new energy reform projects” include manufacturing to be done in China, such as solar panels. Nice job.
Further advice: Now go get drug tested and stop scapegoating our kids, our businesses and our families. It's not their fault. It's YOURS and the fault of the rest of the addicts you call our government officials.
Comment posted January 13, 2010 @ 11:23 am
If you want this recession to become a Great Depression, it's still not too late! We can achieve the dream! Let's make this happen together!
Comment posted January 13, 2010 @ 4:23 pm
If you want this recession to become a Great Depression, it's still not too late! We can achieve the dream! Let's make this happen together!
Comment posted July 2, 2010 @ 5:55 am
Most of the recovery to date is based on increased earnings by banks and companies who have laid off workers to increase their profitabiity, or have benefitted from taxpayer subsidies which cannot go on forever. Its a jobless recovery for US workers, and the taxpayer investments by large have been funneled into large executive salaries and bonuses, not into jobs for the people. When jobs do return, its highly unlikly that they will return to US workers, especially the displaced workers over 50.
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Comment posted July 25, 2010 @ 7:57 am
Most of the recovery to date is based on increased earnings by banks and companies who have laid off workers to increase their profitabiity, or have benefitted from taxpayer subsidies which cannot go on forever. Its a jobless recovery for US workers, and the taxpayer investments by large have been funneled into large executive salaries and bonuses, not into jobs for the people. When jobs do return, its highly unlikly that they will return to US workers, especially the displaced workers over 50.
Comment posted July 25, 2010 @ 7:57 am
Most of the recovery to date is based on increased earnings by banks and companies who have laid off workers to increase their profitabiity, or have benefitted from taxpayer subsidies which cannot go on forever. Its a jobless recovery for US workers, and the taxpayer investments by large have been funneled into large executive salaries and bonuses, not into jobs for the people. When jobs do return, its highly unlikly that they will return to US workers, especially the displaced workers over 50.
Comment posted August 4, 2010 @ 4:25 am
i hope our gov't can solve this unemployment rate faster.
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