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The Breakdown: The Ripple Effects of Unemployment
A banner reading 'Jobs' hangs on thre facade of the U.S. Chamber of Commerce in Washington.
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Forget about Wall Street. The story of the economy has become a tale about jobs. It's the fundamental "economic fundamental."
Getting people back to work. Creating jobs to grow our economy. At first glance, it is a narrative about a number: 14 million Americans looking for work. Six million Americans out of the job market for the longest period in our history. No new jobs in the month of August.
But the story is more than just about the jobless. Unemployment affects us all. It affects people with work, business that are hiring, and cities that have created jobs. It affects our culture, our families, and our friendships. The ripple effects of unemployment go beyond the headlines of job loss and job creation.
It goes to places: "I think the more diversity you have in your economy, the more steady that your employment becomes," says Russell Rogerson with the Charlotte Regional Partnership, a nonprofit group that recruits businesses to Charlotte, North Carolina.
Charlotte has been hit hard since the Great Recession. Bank of America is based there. The city has lost thousands of jobs from the shrinking financial industry. And this week came the rumors of more bad news. Bank of America might layoff 30,000 employees over the next few years across the country. So what does a city do to reinvent itself? How does it go about creating jobs when its main economic engines are sputtering?
It goes to people: "You feel as though you don't really belong in the places that you used to be in." That, according to Dominique Browning, who worked for decades at big name magazines.
She was editor-in-chief of House & Garden for 13 years. It had nearly a million readers when it folded, and Browning lost her job. Now, she's in the process of figuring out the next steps. But you just don't lose your paycheck or your benefits. A lot of folks lose their place, and when unemployment lasts a long time, it can change the way you interact with your friends and family.
It goes to education. "In 1970, the unemployment rate among young people in the sort of 20 to 24 age bracket was about 8 percent. In 2009, it was nearly 15 percent and it's gotten worse since then," says Katherine Newman, dean of the Krieger School of Arts and Science at Johns Hopkins University.
"We're talking about people who are usually in the prime years of entering the labor market and they''re just finding it harder and harder to find a toehold. And if you can't find a toehold when you're in your 20s, things don't necessarily look much better when you get to your 30s," Newman said. "You look like damaged goods. So the whole progress, or pathway, into the middle class is becoming increasingly compromised by the Great Recession."
But try telling that to recent college grads who can't find work even with their fancy degrees. They're stuck between a bad job market and hard reality. And not being able to get unstuck is going to have lasting effects.
It goes to employers: "The longer that you're unemployed, yes, the worse it is. Because they'll start to look at you and ask 'Why are you still unemployed? Is it that you're unemployable?'" That's the outlook of Jared Anderson in his job search.
A few months ago, a trend started to emerge. Help wanted signs with specific language saying unemployed folks would not be considered. Is that legal? There are more workers out of work in this country for a longer period of time than in any recent moment in history. You ask economists and they'll say those are the folks that need jobs. But how do you sell yourself in a market that might see you as "damaged goods."
It goes to society: Marketplace Money host Tess Vigeland discusses how unemployment is affecting our investing. Marketplace's Alisa Roth looks at why crime is down even though unemployment is up. Stacey Vanek-Smith reports on a major shift in how Americans are working in this economy. Adriene Hill covers the growing trend of people heading abroad to find a job. And health report Gregory Warner tells us about the impact that unemployment is having on the uninsured and the insured.
Uncertainty about the job market is creating a new normal for our economy, and the way we live.
As a boomer, I've seen three bubbles and crashes, each one following a reduction in the capital gains tax rates, which were sold on the basis that capital gains is the keep to sustainable economic growth. And that are followed by lots of frenzied exhortations to invest in assets, stocks, real estate, real estate trusts, gold, and as the money flows into those assets, surprise, surprise, their prices go up. Until something triggers an "emperor's got no clothes" moment and the prices crash....
To fuel those bubbles, the tax laws have also sought to funnel more cash into these asset bubbles. The rules for IRAs to defer taxes, then the 401K loophole that became a huge promotion for pouring money into bubbles, then more changes to the tax laws to drive more money into the bubbles like the Roth and higher limits on tax exempt contributions. And let's not forget the total reversal of thinking on debt that has resulted in loan sharks being driven out of business by bankers who promoted high debt as a virtue.
So, other than non-US workers buying stocks and US real estate, who will resume pouring money into these assets to recreate the late-80s, late 90s, and 00s bubble in stocks and real estate to create the image that investing in asset bubbles is the way to prepare for a wealthy retirement?
I bought and held from the early 80s on, trying to diversify, not trying to market time, staying in the market and riding it down to the bottom in the 80s and 2000, and only in 2008 did I pull out in the way down because I failed to liquidate sooner because I needed cash to support being unemployed and in my 60s. And because I was in high tech, I stayed away from the NASDAQ in the 90s even while everyone was proclaiming it would hit 30,000 real soon - I saw that as a bubble before it hit 10,000. That bubble started when the capital gains was cut after a Newt-Clinton standoff, in order to "create wealth" and in 1998 and 1999, conservatives were touting how great the cut to capital gains taxes worked to create wealth, pointing to the NASDAQ bubble and the inflation of other asset prices.
Today the fight is between Obama-Buffett on hiking the capital gains/dividend tax rates back to earned income rates, and conservatives who want to recreate the asset bubble economy by eliminating taxes on capital gains so the entire focus of MBAs will be converting earned income at individual and corporate levels into capital gains to escape taxes, but none of that activity will create real sustained growth.
So, explain why any worker should pour money into the Wall Street pump and dump that has been cheer-led by conservatives who have pushed and pushed job killing tax cuts?
Before the Internet, taking people's money required check fraud, B&E, or robbery, crimes that have been tracked for decades.
Today, theft by deception is the name of the game, often done over the Internet, frequently by identity theft, also by tricking people into providing access to their money.
B&E to steal "stuff" is certainly down because, as noted on a PBS news show, yard sales can't sell anything, and so it goes for free to avoid over filling the trash can which gets dumped out by people looking for good trash. How can you make money pawning stuff when the owners have already overloaded pawn shops with goods, and everyone has been dumping things on eBay and at the consignment shops or given it to Goodwill which sells at low prices.
Economists must always consider substitution effects and competition in looking at data and trying to forecast cycles:
- e-commerce allows theft without physical action
- tens of millions of people who bought hundreds of billions on credit and now in hard times have flooded the market used by thieves to sell stolen stuff driving out the profit in theft of used goods
I was in transition for almost two years. I took the opportunity to discover, volunteer and educate in a field that is a better vocational fit, that was paid for by 2/3s with a WIA (Workforce Investment Act) grant. Faced with the resume gap mentioned in the article, I included my volunteer work in the field as Professional Experience on my resume. I gained an internship out of school that turned contract in May (partly at my request since the environment is very new to me) and took a 2/3s pay cut. Upshot? I made it through by discovering then keeping busy working toward a new vocational goal, and I am ecstatic to be here.
I share this in case it resonates with others and/or shows anyone a way forward to their next success.
Most respectfully,
Jacqueline
Every time we go through a recession American business finds a way to get more done, with less people. After decades of being on the losing end of antitrust and pro-regulatory tides, big business is licking their chops at a chance to eliminate government and completely call the shots in labor relations. This is a very troubling turn of events and will lead to corporate mistrust and resentment. I'd really like to see us return to the days when working was equated with pride, not corporate indenture and paranoia. This nation needs to reconcile with the fact that it leads the way of the world. Pray we do not adopt the "China Model" of labor relations.
I hadn’t heard that this latest jobs bill included a clause making it illegal to discriminate on the basis of employment status. Gee, that’ll help. Now people will be jumping through even more employment application hoops before being round-filed or deleted with a mouse-click. As it is, many legitimate postings are only there to satisfy legal requirements anyway. Everyone knows the hiring is done from within. (I had a math instructor, whose regular job was with McDonald Douglas, who once told his students straight out not to bother applying there, because, “they don’t hire off the street.†So why do they accept applications? Company protocol.)
Many of these issues have been around long before the recession. We’ve had a pro-business/anti-government/anti-labor work environment for decades now, which has grown ever more brazen over the last fifteen or twenty years—with government help, in many states. Remember when overtime or the day off with pay on a statutory holiday was generally accepted? In your own broadcast, you spoke of a woman who refused work offered to her at below the minimum wage. Is anyone in the Dept. of Labor listening? Will anything be done to discourage other employers from enticing prospective employees to break the law? Are there any laws in place based on strict liability, rather than personal liability, to prevent it? You might ask the unemployed attorney you interviewed here, but I think the answer is no in all cases. It’s a culture. Each industry has its own way, but it’s fairly common now to expect workers to work without overtime over 40 hours a week, and stipulate such an arrangement before hiring. No employer should be forced to hire anyone, but they should be compelled to observe—or even know—the law. I would advocate for a federal, public employment agency that serves the interests of the unemployed rather than the discriminatory whims of potentially abusive employers who know full well that an employee isn’t going to bother suing for anything.
I listened to your breakdown on unemployment. Thank you for an excellent piece. I was particularly struck by the outrageous trend of not accepting applications from currently employed people. Recent reports in other places have outlined what I consider to be abuses by human resource departments across the country. This is a class that bears further scrutiny, and education. Thank you for your excellent work.
Brett Cope
