On Staying Fired

I’ve blogged about different sides of unemployment and underemployment. I have shown how the vast majority of new jobs are at the bottom of the pay scale, focused on food services, hospitality and other minimum wage sectors or blending short-term contract and part-time jobs. I’ve drilled down on the number of Social Security-qualified older workers, having given up finding work to sustain their existing lifestyles, have opted to retire, stopping letting those benefits accrue to a higher level, and simply accepting that they are unlikely ever to find meaningful employment again. Today, I want to focus on that job segment that suffers from long-term unemployment but is either insufficiently skilled (or over-skilled) to find work in this job market, or are too old to be attractive to employers and too young for social security.

According to the November 16^th New York Times, “The unemployment rate has fallen to 7.3 percent, down from 10 percent four years ago. Private businesses have added about 7.6 million positions over the same period. But while recent numbers show that there are about as many people unemployed for short periods as in 2007 — before the crisis hit — they also show that long-term joblessness is up 213 percent.

“In part, that’s because people don’t return to work in an orderly, first-fired, first-hired fashion. In any given month, a newly jobless worker has about a 20 to 30 percent chance of finding a new job. By the time he or she has been out of work for six months, though, the chance drops to one in 10, according to research by the Federal Reserve Bank of San Francisco.

“Facing those kinds of odds, some of the long-term jobless have simply given up and dropped out of the labor force. So while official figures show that the number of long-term jobless has fallen steeply from its recessionary high of 6.7 million, many researchers fear that this number could mean as much bad news as good. Workers over 50 may be biding their time until they can start receiving Social Security. Younger workers may be going to school to avoid a tough job market. Others may be going on disability, helping to explain that program’s surging rolls.” Folks who aren’t actively looking, even those who want jobs but no longer know where to look and have long-since lost unemployment benefits, simply are not measured anymore. As far as labor statistics go, they just don’t exist.

While most forms of unemployment are cyclical, rising and falling with the economic times, this last mega-recession has added another variable into the mix: long-term, chronic structural unemployment. This twist impairs longer-term economic growth, taxes social services to a higher level, erodes the tax base and adds a new quality of disenfranchised Americans, seething with anger at a system that is slanted against them, with little stake in the overall society. An overall unemployment rate of around 5% is normal in a healthy economy, but when your 7.3% unemployment numbers miss a very large segment of society, the statistics lose their value as economic predictors.

And without any clear solutions, our government officials simply tell us that the economy just hasn’t improved enough to cover this deficit, but that unemployment is still “just cyclical.” “Economists come to this conclusion in part because there is no evidence that the long-term jobless are accumulating in any one industry, which would be a signal that the economy needs to move workers from, say, manufacturing into nursing. Long-term unemployment has hit workers young and old, of all industries, races and backgrounds. But the long-term jobless actually tend to be more educated. And long spells of joblessness have hit black workers especially hard, as well as single parents, the disabled and older workers.

”With time, however, even people with desired skills can become ‘structurally’ unemployed. Longer spells of unemployment become harder to explain away. Jobless workers’ skills can atrophy. Job seekers find it harder to appear eager. Wounds become scars.” NY Times. Educated older people are often overlooked for the menial, minimum wage jobs as “overqualified” (hence they will evidence dissatisfaction with the work quickly and are unlikely to get along with the genuinely unskilled co-workers).

Higher-end employers often avoid even well-educated long term unemployed for several reasons: if they were worth it, why didn’t they get something  or  they’ve been out of the job market so long that their job skills, relevant current industry contacts and ability to deal with contemporary market shifts are simply rusty or non-existent. “[N]ew evidence shows that bias plays a much larger role than previously thought. Some of the long-term unemployed might never find work because businesses simply refuse to hire them.

“In a recent study, Rand Ghayad a Ph.D. candidate at Northeastern University, sent out 4,800 dummy résumés to job postings. Those résumés that were supposedly from recently unemployed applicants with no relevant experience were more likely to elicit a call for an interview than those supposedly from experienced workers out of a job for more than six months. Indeed, the callback rate for the long-term jobless ranged from just 1 to 3 percent, versus 9 to 16 percent for newly unemployed workers.

“Unemployment becomes a ‘sorting criterion,’ in the words of a separate study with similar findings. It found that being out of a job for more than nine months decreased interview requests by 20 percent among people applying to low- or medium-skilled jobs… In dozens of interviews, the long-term unemployed described discrimination as being foremost in their minds, though at the same time they said the experience of joblessness had changed them.” The harsh reality is that these otherwise qualified people might never work again and may form yet another underclass dependent on government entitlement to survive. And while there a lot of fiscal conservatives with a “so what, we just can’t afford to support them anymore” view of our federal budget, there is a certain heartlessness about this attitude that defies what was once “we’re all Americans in this together” mantra that made America special.

I’m Peter Dekom, and solving problems for hard-working Americans has to start with caring about them.