Millions of Unemployed Face Years Without Jobs

Discussion in 'Economics' started by hermit, Feb 21, 2010.

  1. Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.

    Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.

    Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.

    Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.

    Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.

    She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance.

    “I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got to go with what you know.”

    Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s.

    Men have suffered the largest numbers of job losses in this recession. But Ms. Eisen has the unfortunate distinction of being among a group — women from 45 to 64 years of age — whose long-term unemployment rate has grown rapidly.

    In 1983, after a deep recession, women in that range made up only 7 percent of those who had been out of work for six months or longer, according to the Labor Department. Last year, they made up 14 percent.

    Twice, Ms. Eisen exhausted her unemployment benefits before her check was restored by a federal extension. Last week, her check ran out again. She and her husband now settle their bills with only his $1,595 monthly disability check. The rent on their apartment is $1,380.

    “We’re looking at the very real possibility of being homeless,” she said.

    Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

    Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.

    Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed.

    A New Scarcity of Jobs

    Some labor experts say the basic functioning of the American economy has changed in ways that make jobs scarce — particularly for older, less-educated people like Ms. Eisen, who has only a high school diploma.

    Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.

    “American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”

    During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.

    “The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan said. “There is no indication that this pattern is about to change.”

    Before 1990, it took an average of 21 months for the economy to regain the jobs shed during a recession, according to an analysis of Labor Department data by the National Employment Law Project and the Economic Policy Institute, a labor-oriented research group in Washington.

    After the recessions in 1990 and in 2001, 31 and 46 months passed before employment returned to its previous peaks. The economy was growing, but companies remained conservative in their hiring.

    Some 34 million people were hired into new and existing private-sector jobs in 2000, at the tail end of an expansion, according to Labor Department data. A year later, in the midst of recession, hiring had fallen off to 31.6 million. And as late as 2003, with the economy again growing, hiring in the private sector continued to slip, to 29.8 million.

    It was a jobless recovery: Business was picking up, but it simply did not translate into more work. This time, hiring may be especially subdued, labor economists say.

    Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn.

    At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.

    All of which helps explain why Ms. Eisen — who has never before struggled to find work — feels a familiar pain each time she scans job listings on her computer: There are positions in health care, most requiring experience she lacks. Office jobs demand familiarity with software she has never used. Jobs at fast food restaurants are mostly secured by young people and immigrants.

    If, as Mr. Sinai expects, the economy again expands without adding many jobs, millions of people like Ms. Eisen will be dependent on an unemployment insurance already being severely tested.

    “The system was ill prepared for the reality of long-term unemployment,” said Maurice Emsellem, a policy director for the National Employment Law Project. “Now, you add a severe recession, and you have created a crisis of historic proportions.”

    Full Article here -
  2. pitz


    Look at the people who trained for the tech industry, only to have it collapse in 2001-2002, and to have the rebound be dominated by foreigners. Most of those people haven't found new jobs, and now we are here, 8 years later.

    Its an utter disaster out there folks. The economy never really did improve.

    Yes, this is from Drudge but he got it from PrisonPlanet. Not your ideal source but I tend to wonder about it is the TRUTH, I saw the letter in the statement of my friend who is closing all his accounts at CITI.

    Citi bank, which IMHO is insolvent and in trouble (just a hunch..) released the "You can not withdrawal your funds for 7 days" for Texas only they say.

    Humm, why would anyone in Texas want to withdrawal their funds from CITI? BECAUSE TEXAS ISN'T STUPID and they those who live in Texas, transplants or locals, know that the National Banks are being prompt up by "FEDS".

    Who in their right mind would leave any money in CITI or BAC for that matter.

    The house of cards isn't finished falling as of yet.

    DUBIA is gona cause a hella of a drop as is the Commerical RE on the books of those banks...all be it BAC has less exposure.

    And for all those unemployed who are running outa benefits this next month, who bank at CITI? Humm, do you think they are gona tap their CITI accounts next?

    Wake up America.....or follow the yellow brick road to poverty.

    The article try's to blame it on "Investors" in corporations who have pushed out labor unions. BULLSHIT. Unions have done more destruction to "Jobs" than any "Investor". Those who were living the high life on borrowed money are now paying the piper. You live in debt, you shall enter the world of poverty...this has been the outcome for "Hundred of years".

    The bullmarket of "DEBT" as just a small blip on the radar. Those who fell for it are now gona have to face reality. Nothing more nothing less.

    There will be plenty of people who are successful because they can read between the with CITI.
  4. There are plenty of talented people out there and the best we can do is hand these people an unemployement check.

    If you tossed out the rule book we probably get everyone a job doing something.

    Every co in this country could use a few more employees to improve one thing or another, ya think the Fed could offer a incentive to corps.

    If you hand over a 2-300 dollar unemplyment check for no payoff why not offer that sum to a company with another 1-200 tax credit and voila you have a 500 check to pay an employee with no cost to the company.

    Of course there are a few minor details to touch up but the point is to get people out and moving.

    We should build on what is working rather than trying to invent faux industries (green, etc).
  5. DUBIA is gona cause a hella of a drop as is the Commerical RE on the books of those banks...all be it BAC has less exposure.


    I just read that commercial is in rather dire straights. I think many loans are coming due within the next 2 years. Each day I think this might be as good as it gets. I wish I had the link now to post re commercial re, it wasn't gloom and doom more like news you should be aware of and plan accordingly.
  6. S2007S


    100,000-150,000 new jobs have to be created just to absorb the new work force, millions of jobs lost over the last 2-3 years will never come back. Anyone actually think this economy is going to create millions of jobs needed?? Maybe some more asset bubbles could be the answer.
  7. There is one sure fire solution that would get everyone working nearly overnight.

    Cut minimum wage and no more unemployment benefits. Let the free market reign and see what is fair. See what people will work for, and how businesses thrive with increased cheap labor.
  8. Send the 30mil illegal aliens home and you have an instant job creation scenario, plus welfare rolls that can support citizens.
  9. If people work full time and still have to live in their cars, many would steal, rob or deal drugs.
  10. pitz


    But labour prices aren't exactly very high domestically, and there are plenty of instances where people (ie: bankers) are employed at $100-$200k/year, when there are hoardes of equally qualified people banging on the doors to work for even half that. So just cutting minimum wage won't get those people back to work.

    Rationally, employers would reduce salaries until there is a natural 'clearing' of the system, and everyone is back to work. But that's not happening, especially not in the public sector.

    A huge part of the problem is that the economy isn't organized to have such flexibility. The excessive size of the public sector, a deeply flawed immigration system (that has destroyed tech employment for Americans because slaves can be imported from India on the H1-B visa system), and horrible energy policy are issues that would need to be addressed.

    And quite frankly, I don't think America can actually afford to have everyone working and consuming, because the type of 'production' that actually happens in the USA is very innefficient. If 20% more people were working today -- where would oil prices be -- $300/barrel probably!
    #10     Feb 22, 2010