As the nation’s 8 million jobless wait for evidence that a growing economy will finally lead to robust hiring, one thing is already clear: Long-term joblessness is the worst it’s been in this country for more than 20 years.
According to a new study by the Economic Policy Institute, a Washington, D.C., think tank, 22.1 percent of all unemployed workers were out of work for six months or more in 2003–the worst annual rate since 1983.
And a growing number of those long-term job seekers were people with lots of experience and plenty of education, raising more questions about the loss of highly paid work during the nation’s persistent “jobless recovery.”
“What this shows,” said EPI economist Sylvia Allegretto, “is not that young, uneducated people are doing better. It’s that older, better educated people are joining them [among the long-term unemployed].”
Economists expect the February unemployment report–due out Friday–to show more improvement in the labor market after January’s gain of 112,000 jobs. New and continuing jobless claims have fallen during the month and various business surveys point to increased hiring, said Mark Zandi, chief economist of Economy.com.
Even though monthly rates have come down some from the worst of last year, long-term unemployment rose slightly in January. That put pressure on the Bush administration and gave new ammunition to Democratic rivals.
Chronic joblessness has been particularly painful since December, when Congress allowed the federal extension of state unemployment benefits to expire.
The Center on Budget and Policy Priorities, a liberal think tank in Washington, D.C., estimates that 760,000 have lost their benefits nationally since the federal program ended. In Illinois alone, 17,679 residents exhausted their 26 weeks of regular state benefits in January and did not qualify for another 13 weeks of aid.
A lack of education remains the quickest way to join the ranks of the unemployed. People with a high school degree or less make up almost two-thirds of the nation’s jobless and more than half of the long-term unemployed.
But since the economy began to sour in 2000, the number of older, college-educated people among the long-term unemployed has exploded.
The EPI study shows that the number of people with a college degree who have been out of work for at least six months grew 299 percent to 369,115 people by the end of 2003. The number of people 45 and older in the same situation grew 217.6 percent to 685,387 people.
The study also shows that college graduates now make up a disproportionate share of the long-term unemployed. While grads comprised 15.3 percent of the unemployed, they represented 19.1 percent of the long-term unemployed.
Why this is happening remains a question, economists said. Outsourcing of white-collar jobs to places like India is probably one explanation. More important is that companies are using new technology to boost productivity, eliminating white-collar work in greater numbers, Allegretto said.
Decrease in desirable jobs
It’s also true that the jobs being created in today’s economy aren’t as desirable as in the past. Temporary agencies, for instance, have done a lot of the hiring over the past year. But those jobs aren’t necessarily a good fit for someone used to a good salary and benefits.
Another EPI study of job quality shows that in 48 of 50 states, jobs in higher-paying industries are shrinking while jobs in lower-paying industries are growing. From the end of 2001 to the end of 2003, the industries losing jobs paid wages of $16.92 an hour on average, while the industries gaining jobs paid an average wage of $14.65.
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In February, the Pew Hispanic Center released another surprising finding. According to the Labor Department’s Current Population Survey, Hispanics grabbed 64 percent of the new jobs created during 2003. One reason is that they didn’t pay as well.
The Pew report showed that Hispanics–many of them new immigrants–flocked to construction sites as low interest rates pumped up home building. That helped lower the unemployment rate among Hispanics, but also put downward pressure on their wages.
John Narusis, of suburban Crystal Lake, knows how hard it is to find a white-collar job these days. Thirteen months ago he was a technical support worker for an aerospace company in Rockford. But after surviving several rounds of layoffs, he eventually lost his job.
Since then, the 46-year-old has done some part-time computer work. He has even raised cash videotaping weddings. But after more than a year he has no real prospects and no health insurance.
“I was able to keep up with Cobra for six or seven months,” he said. “Then I had to let it go.”
Narusis was lucky in one respect. Because he worked for an aerospace company, he has received 39 additional weeks of federal jobless benefits under a program that helps industries adversely effected by the Sept. 11 attacks. In January, he began a new benefit year and is eligible to receive another 26 weeks of state benefits.
Unfortunately, those new checks are $400 a month less than he had been getting. And his wife doesn’t work either. Consequently, he has applied for jobs at places such as Menard’s and Home Depot without any success.
“This is ridiculous,” Narusis said. “I’m not the type of individual you would think would take this long to find a job. You sometimes wonder if it’s your age. Or on the application, they ask for your past salary. You’re in a Catch-22. They don’t want to hire you because they’re afraid you’re going to find a regular job and quit.”
Employees like Narusis aren’t likely to get much help from the federal government. A Senate measure to restart the federal unemployment extension program was attached to a gun liability bill. But last week it fell two votes short of the 60 needed to pass, despite support from 12 Republicans from high-unemployment states.
Economy might add to woes
It’s also unclear how much help to expect from the economy.
Like most economists, Zandi of Economy.com is hopeful that increased production and robust corporate earnings will soon lead to meaningful hiring. But as merger activity picks up around the country, he now has a fresh worry.
“One question I have is what businesses are going to do with all the cash they have [from increased earnings],” Zandi said. “Could it be the case that they will use it to acquire and merge and try to consolidate to gain market share?”
Mergers, of course, often lead to layoffs and that could put pressure on the job market all over again. Zandi said he has already gotten a few e-mails from employees of J.P. Morgan Chase looking for work in the wake of its recent merger with Chicago’s Bank One.
History says the jobs will eventually appear, Zandi said. “But history has not been a very reliable guide through this period.”
Economists have been fooled in the past. Zandi hopes there will be a positive surprise this month.
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U.S. UNEMPLOYMENT
Overall rate / Long-term
2000: 4.0%
2001: 4.7%
2002: 5.8%
2003: 6.0%
1.9 million people out of work for more than six months
Source: U.S. Department of Labor, Economic Policy Institute
– – –
Jobs harder to find for older workers
A report by the Economic Institute indicates that since 2000 the long-term unemployment rate, which measures people unemployed for six months or more, has increased the most for older and better educated workers.
Long-term unemployment
BY AGE
2000
16-24: 153,219
25-44: 280,085
45+: 215,815
2003 PCT CHG
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16-24: 374,065 +144.1%
25-44: 876,362 +212.9%
45+: 685,362 +217.6%
BY EDUCATION
2000
High school or less: 420,002
Some college: 136,698
B.A or higher: 92,418
2003 PCT CHG
High school or less: 1.1 million +156.1%
Some college: 491,146 +259.3%
B.A or higher: 396,115 +299.4%
Source: Economic Policy Institute
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