By PETER S. GOODMAN for the New York Times
Published: February 20, 2010
(Excerpted for this post)
Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.
Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives - potentially for years to come.
Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.
Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces - some embedded in the modern-day economy, others unique to this wrenching recession - might make it especially difficult for those out of work to find their way back to their middle-class lives.
Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.
Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed.
Some labor experts say the basic functioning of the American economy has changed in ways that make jobs scarce - particularly for older, less-educated people who have only a high school diploma.
Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 - the sort of jobs that once provided lower-skilled workers with middle-class paychecks.
Some 34 million people were hired into new and existing private-sector jobs in 2000, at the tail end of an expansion, according to Labor Department data. A year later, in the midst of recession, hiring had fallen off to 31.6 million. And as late as 2003, with the economy again growing, hiring in the private sector continued to slip, to 29.8 million.
It was a jobless recovery: Business was picking up, but it simply did not translate into more work. This time, hiring may be especially subdued, labor economists say.
Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn.
At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.
If, as Mr. Sinai expects, the economy again expands without adding many jobs, millions of people will be dependent on an unemployment insurance already being severely tested.
"The system was ill prepared for the reality of long-term unemployment," said Maurice Emsellem, a policy director for the National Employment Law Project. "Now, you add a severe recession, and you have created a crisis of historic proportions."
Some poverty experts say the broader social safety net is not up to cushioning the impact of the worst downturn since the Great Depression. Social services are less extensive than during the last period of double-digit unemployment, in the early 1980s.
On average, only two-thirds of unemployed people received state-provided unemployment checks last year, according to the Labor Department. The rest either exhausted their benefits, fell short of requirements or did not apply.
Yet as jobs have become harder to get, so has welfare: as of 2006, 44 states cut off anyone with a household income totaling 75 percent of the poverty level - then limited to $1,383 a month for a family of three - according to an analysis by Ms. Albelda.
"We have a work-based safety net without any work," said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin, Madison. "People with more education and skills will probably figure something out once the economy picks up. It’s the ones with less education and skills: that’s the new poor."
Full story here: http://www.nytimes.com/2010/02/21/business/economy/21unemployed.html
See all my posts on the current unemployment situation:
Like the last Great Depression, Unemployment and Foreclosures, Might See Rise in Suicides
http://tobuds.com/blogs/blog1.php/2010/03/10/unemployment-foreclosures-might-see-rise
The New Poor - Millions of Unemployed Face Years Without Jobs
http://tobuds.com/blogs/blog1.php/2010/02/21/the-new-poor-millions-of-unemployed-face
Government Jobs (Bigger Government) Drive Employment Numbers
http://tobuds.com/blogs/blog1.php/2010/03/01/government-jobs-bigger-government-drive
Actual Unemployment in 2010 - Recession Worse than Reported
http://tobuds.com/blogs/blog1.php/2010/02/04/actual-unemployment-in-january-2010-rece
Deep Recession Shows No Sign of Letting Up - Maybe Getting Worse
http://tobuds.com/blogs/blog1.php/2010/02/24/deep-recession-shows-no-sign-of-letting
Largest U.S. Labor Union: AFL-CIO says Jobs Won't Return
http://tobuds.com/blogs/blog1.php/2010/01/07/largest-u-s-labor-union-afl-cio-says-job
More Bad News for the Unemployed in 2010 - and Beyond
http://tobuds.com/blogs/blog1.php/2010/02/23/more-bad-news-for-the-unemployed-in-2010
Almost 1 out of 5 People are Out of Work in the U.S.A.
http://tobuds.com/blogs/blog1.php/2009/12/31/unemployment-december-2009-new-release
FOX News Wages War on Unemployed - Thinks They're Lazy
http://tobuds.com/blogs/blog1.php/2010/03/02/real-reason-why-extended-unemployment-be
Tea Party, Fox News, and Conservatives Attack the Unemployed
http://tobuds.com/blogs/blog3.php/2010/03/04/tea-party-gets-in-wrong-on-unemployment
Obama-Care © Verses Unemployment and Suicide in 2010
http://tobuds.com/blogs/blog3.php/2010/03/07/out-of-work-buy-a-shotgun
27 Million of 154 Million in Workforce w/o Jobs
http://tobuds.com/blogs/blog3.php/2010/03/15/27-million-of-154-million-in-workforce-w
Fox News Continues to Insult Unemployed
http://tobuds.com/blogs/blog3.php/2010/03/13/fox-news-continues-bashing-the-jobless
"Diversity" and Illegal Hiring Practices
http://tobuds.com/blogs/blog2.php/2010/03/12/mgm-mirage-illegal-hiring-practices
Obama-Care© Makes it Easier to Fire Older Workers!
http://tobuds.com/blogs/blog5.php/2010/03/27/obama-carec-makes-it-easier-to-fire-olde
Too Old for the Workforce in 2010 - Unemployed Because of Age
http://tobuds.com/blogs/blog3.php/2010/03/06/too-old-for-the-workforce-in-2010-unempl
No, Unemployment Benefits is not an Inalienable Right
http://tobuds.com/blogs/blog3.php/2010/03/15/no-unemployment-benefits-is-not-inaliena
Senator John Ensign and the GOP - "Let the Jobless Eat Cake"
http://tobuds.com/blogs/blog3.php/2010/03/27/john-ensign-and-gop-let-the-jobless-eat
The Jobless Have Been Lost in Debate Over Healthcare
http://tobuds.com/blogs/blog3.php/2010/03/27/the-jobless-lost-in-debate-over-healthca
Extended Unemployment Benefits - Fully Explained - UPDATED
http://tobuds.com/blogs/blog3.php/2010/02/16/extended-unemployment-benefits-in-2010
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