The long-term effects of a jobless economy

Marketplace Staff Sep 7, 2011

The long-term effects of a jobless economy

Marketplace Staff Sep 7, 2011

Kai Ryssdal: So let’s say the arguments Bob Reich was just making don’t carry the day. That 9 percent unemployment or maybe something a little bit less becomes the new normal. What happens then? Not in a gross domestic product way, but in a people way.

Don Peck of The Atlantic magazine writes about that in his new book “Pinched.” Good to have you with us.

Don Peck: It’s my pleasure, Kai.

Ryssdal: I want to start with something you wrote in The Atlantic about a year, year and a half ago, that we talked about on the show at the time. You say that there’s unemployment — you know, regular old unemployment — and then there’s unemployment, that really lasts and endures. What’s the difference, and what does that look like?

Peck: Well I mean, Rutgers actually just did a poll (PDF) of people who’d been unemployed for more than seven months, which is less than the average duration of unemployment in the U.S. today, and they found that more than half of the respondents were withdrawing from friends, were reporting stressful marriages, were not sleeping regularly. Fifteen percent had acquired a substance abuse habit. When you have a situation where people just can’t find work month after month, it changes them. Being unemployed for more than six months is about the worst thing that can happen to you. Psychologically, it’s equivalent to the death of a spouse and is a kind of bereavement in its own right.

Ryssdal: Does it change depending on how old you are? And I ask because I’m thinking for some reason of young people in this economy and all the research that shows, you know, if you don’t get a job out of college, you pay the price your whole life in a wage gap and in upward mobility and all of that.

Peck: People who struggle early in bad jobs or in no jobs because of a weak economy not only start behind, they never fully catch up, even 10, 15, 20 years later. They’re making less than they otherwise would have, and they’re stuck disproportionately in low-status jobs.

Ryssdal: We are, you know, depending on who you talk to, halfway through a lost decade — we’re five years in. How much longer do we have before it’s too late to change some of these effects?

Peck: Well, we’re already seeing changes. Our politics have become meaner in this period; anti-immigration sentiment has swelled; support for the poor has diminished. These things are all common in periods like this.

Ryssdal: When you say politics get meaner, you don’t mean the Republicans and Democrats yell at each other more. You mean that there is a cut to benefits for people in need, there’s anti-immigrant sentiment, there’s all of that stuff.

Peck: When times are hard for long periods of time, it actually becomes harder and harder for the government to engage in creative, large-scale public actions, really to get much of anything done, because the entire atmosphere — regardless of Republican versus Democrat — becomes poisoned by a sense of discontent, insecurity for people in office. And that’s yet another risk of this period.

Ryssdal: Well, let me end, then, with a question about those policies and the idea that personal conservatism when the economy is rough and when these things happen, leads to larger national conservatism. That people want the government to be counting their pennies as well, like regular people have to. And what that might mean for, say, the president’s speech tomorrow night, and any real chance of stimulus?

Peck: It makes me somewhat skeptical that the stimulus will happen. When you look at prior recessionary periods: in 1936, people were likewise concerned about growing government debt. The government did actually slash spending, raise taxes in 1937, stock market crashed, unemployment went up again, and we had another five years of depression. So it’s kind of a natural psychological reaction after a bubble bursts to become more personally conservative, to become adverse to risk and to debt of any kind. So what we’re seeing now, what we’ve seen over the past few months, is really quite natural, but it’s also quite counter-productive. And all we can do is try to guard against that.

Ryssdal: Don Peck, he’s a features editor for The Atlantic magazine. His book is called “Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It.” Don, thanks a lot.

Peck: Thank you, Kai.

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