Truesee's Daily Wonder

How Bad Is It Really for the Unemployed?

May 25, 2010 —

On some level, we all know that times are really tough for the millions of people the Great Recession threw out of work—and for the millions of others who are looking for their first job. Many of us have read that long-term unemployment (26 weeks or more) is at a record high. But sometimes it takes a new angle of vision to make you see just how difficult things are. My “aha” moment came over the weekend, when I read a recent survey that tracked the fate of a large sample of individuals who were unemployed as of last August. Here's a summary:

Of the 908-person sample, 67 percent remained unemployed but were still looking for work, and an additional 12 percent had given up and dropped out of the labor force. Only 21 percent had found jobs (only 13 percent full-time) and were currently employed. A stunning 28 percent of the newly reemployed had been looking for work for more than one year, and 6 percent for more than two years. Fifty-five percent accepted a pay cut in their new jobs; 13 percent took a cut larger than one-third of their previous salary.

Women (26 percent newly employed) did somewhat better than men (18 percent). Surprisingly, young adults (29 percent newly employed) did better than 30 to 49-year olds (21 percent). Not surprisingly, this is a terrible time to be over 50 and out of work: Only 12 percent of these older workers had managed to find jobs.

Blacks or Hispanics (22 percent newly employed) got jobs at a similar clip to whites (21 percent). Education and income mattered, but not as much as one might expect. Individuals with some college training were no more successful than those with a high school diploma or less, and only 28 percent of college graduates who were unemployed last August had found work in the interim. And while only 19 percent of those making less than $30,000 were newly employed, the numbers weren’t much better for those making $30-60,000 (22 percent) or $60,000 and over (26 percent).

In short, there has been no place to hide from the Great Recession, and the traditional formula—get a good education and be persistent—is not reliably producing the right outcomes. The American people know that something out of the ordinary is taking place: 63 percent believe that the economy is undergoing “fundamental and lasting changes,” versus only 37 percent who think it is experiencing a temporary downturn. This shift has consequences that go well beyond the economic. For many Americans, the old verities have been cast aside, with nothing to take their place. As far as they can see, they’ve done everything right, but their expectations have been upended and their life-plans disrupted. In these circumstances, people are bound to think that the country is on the wrong path, and they are bound to feel a combination of confusion and anger toward a political system that they see as having let them down.

President Obama has pledged to rebuild the U.S. economy on a new and more solid foundation. That’s vital. But so is restoring the belief that there is some relation between effort and reward. If the old rules are obsolete, we not only need new rules—a 21st century unemployment insurance system, say, or infrastructure investment and employment, or hours-reductions and job-sharing as an alternative to outright job loss—but also a political system that is prepared to back them up. It’s hard to see how we can make the hard choices needed to build our future unless ordinary Americans come once more to believe that there’s something in it for them.