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April 07, 2013 2:56 PM Two new reports show how our high-unemployment economy is killing the American dream

By Kathleen Geier

As you no doubt have heard by now, Friday’s jobs report was pretty awful. Two newly released reports document the devastating effects our high-unemployment, low-growth economy is having on millions of American workers.

One report, the Pew Charitable Trust’s Hard Choices: Navigating the Economic Shock of Unemployment, is an in-depth study of families who had at least one member who was unemployed for at least one month between 1998 and 2010. The big takeaway from this report is that a spell of unemployment can severely damage a family’s chances of upward mobility, because the economic shock frequently wipes out a family’s savings and assets.

For example, the families studied reported in engaging in behaviors such as the following:

— Tapping into resources originally allocated for their children’s education or their own retirement;
— Taking out risky small-dollar loans with high fees; and
— Depleting assets in order to meet qualifications for public assistance.

Unsurprisingly, low-income families and families of color were the families most likely to experience job loss, and also those who had the fewest resources to rely upon when job loss hit. Here’s one shocking statistic that leapt out at me:

when comparing households that experienced unemployment, the median wealth of white households was at least seven times that of black households in each year of the study.

The report recommends policy responses, including reforming unemployment insurance, providing low-cost loans, and creating tax incentives to encourage families to save for emergencies. All of those things would be welcome interventions, but what we really need is an economy that fundamentally provides more justice and prosperity for all workers. Otherwise we’re just applying band-aids to people who are bleeding to death.

The second report, by the excellent National Employment Law Project (NELP), looks at the long-term unemployed and the impact their removal from the work force is having on the entire economy. NELP’s main findings are that bad economic policies are unnecessarily prolonging the recession; that compared to previous recessions, an unusually high proportion of the unemployed have been unemployed long-term; and that many of the jobs that have been lost are good jobs, while the ones being created in their stead are pretty cruddy ones.

Here are some of the deets:

— The sequester and other budget-cutting shenanigans are costing us over 2.4 million jobs.

— Currently, there are over 27 unemployed or underemployed workers in the United States. This includes part-time workers who would rather be working full-time, and discouraged workers.

— The average spell of unemployment is 37 weeks (yikes!), which is more than double of what it was in any recession since the 1950s.

— African-American workers make up a disproportionate amount of the long-term unemployment; they’ve been hard hit by austerity measures and public sector layoffs.

— Americans with college degrees are suffering far more in this recession than in previous ones. During the Great Recession, the number of long-term unemployed with bachelor’s degrees grew five-fold.

— Good jobs went bye-bye, to be replaced by sucky ones. The report notes, “Six in ten jobs lost during the downturn were in mid-wage occupations. By comparison, during the recovery, employment in lower-wage occupations grew by 2.8 times more than employment in mid- and high-wage occupations.”

Sorry, but there’s no optimistic gloss that I can put on any of that. It’s an appalling picture, and made all the more disgraceful because it was almost entirely avoidable. Even now, some of the damage could be ameliorated with saner fiscal and monetary policies. NELP is promising a follow-up report next month offering some solutions to this mess, specifically geared toward the problems of the long-term unemployed. Let’s hope someone in power listens to what they have to say.

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee

Comments

  • c u n d gulag on April 07, 2013 4:43 PM:

    GOP POV:
    So, overall success, over all, all over!

    The less "THEY" make, the more "WE" make!

    Victory "Over all," dont't mean nothin', unless WE win victory over those who "Who didn't work hard enough, to "save enough!?"
    'Specially,' if the aint's WHITEE - 'n "Well off!!!"

    WE WIN!!!!!!!!!!!!!!!!!!!!!!!!

  • iyoumeweus on April 07, 2013 4:58 PM:

    ECONOMIC OBSERVATIONS
    FIRST OBSERVATION: Money, wealth, capital, assets, etc. can be created and destroyed
    SECOND OBSERVATION: Money, wealth, capital, assets, etc. are only useful when it is creating something useful to or for society, the nation or a culture.
    THIRD OBSERVATION: As wealth is taken out of a society and made unavailable through gambling, speculation or other means social disorder increases.
    FORTH OBSERVATION: Money, wealth, capital, assets, etc flows upward and if not stirred becomes stagnant.
    FIFTH OBSERVATION: When consumption increases, employment increases, and visa- versa.
    SIXTH OBSERVATION: No correlation exists between a low income rate for high income citizens and an increase performance in the national economy.
    SEVENTH OBSERVATION: The invisible hand has a thumb on the scale causing free enterprise and markets to favor the most powerful within any society.
    EIGHTH OBSERVATION: Only government can remove the thumb by using laws, rules and regulations and the strong, sure, even and fair enforcement thereof.
    NINTH OBSERVATION: Investment and consumption are not in competition but enjoy a symbiotic relationship. Without investment there would be nothing to consume, and without consumption there would be no reason to invest.
    TENTH OBSERVATION: Full employment leads to fuller production and fuller services, and a more equal distribution of wealth, resources, capital and tax revenue. It does not lead to inflation.
    ELEVENTH OBSERVATION: As the number of mega lending banks decreases, the competition between banks decreases resulting in the credit/bank- ratio-too-GDP increase. When the credit/bank- ratio-too-GDP approaches 100%, the economic growth of the nation decreases.
    TWELVETH OBSERVATION: As unemployment increases the nationís deficit and debt increases. As unemployment falls so does the deficit and debt, they are directly coupled! WHY? Workers pay income taxes. Taxes produce government revenue thereby reducing the deficit and debt.


    LESSONS LEARNED
    A successful national economy requires:
    1. Trained enforcers of strong rules and regulation based upon fair laws of: banks, financial institutions, brokerage houses and sellers of securities including stocks, bonds, mutual funds and other types of investments.
    2. Automatic stimulus program whenever a downturn in the economy begins to occur. Involving infrastructure, defense, training and financial assistance to state and local governments.
    3. Control of the money supply, and how its ownership is distributed.

  • Rick B on April 07, 2013 5:03 PM:

    The decline in wages dates back to the election of Ronald Reagan and his destruction of the Professional Air Traffic Controllers in the 1981 strike. That strike-breaking action and the growth of the conservative movement have led employers to use every means, fair and foul, to pay less for the same work ever since.

    Since then the American workers have been seen as a cash cow to be exploited for money and never to be rebuilt. We are all aware of the drain of jobs to overseas cheap labor locations. Pensions have been destroyed, generally replaced by 401(k) s which, recent reports are showing leave out close to 80% of all workers. Government pensions were not effected until the Tea Baggers and Koch brothers surrogates like Wisconsin's Walker were elected in 2010. Just look at the racist destruction of what was left of Detroit's cities since the Great Recession accelerated the exodus of American manufacturing jobs overseas.

    Wall Street Banks love this. Look at the stock market. The stock market is hitting new highs while Americans themselves are heading for new lows. Those Wall Street Profits come largely from outside the U.S. or from funding exploitative interests and fees on bank services like credit cards, or PayDay loans, or Rapid Refund loans on IRS returns (about 450% per year), or exploitative used car sales at high interest rates and rapid repossessions if you miss a payment.

    At the same time the state legislatures are cutting subsidies to Universities and Colleges while student loans are set up to replace the money. Of course, the students who graduate can't get jobs, so the loans are not allowed to be included in bankruptcy. This is exploitation of a very high percentage of attempted college students.

    If you are reading this comment and don't recognize some areas in which you are being exploited to make the rich much richer, then you have to be one of those rich yourself or you are simply too ignorant to realize when you are being screwed. Conservatives - and Tea Baggers especially - are rapidly destroying America as we watch.

  • PTate in MN on April 07, 2013 5:54 PM:

    "Let’s hope someone in power listens to what they have to say."

    Nothing has made them listen so far, and I've begun to wonder if anything can make them hear. During the Bush years, we used to say, "if you aren't outraged, then you're not paying attention." Now it seems to be, "even if you are paying attention and outraged, no one in a position to change things cares what you think."

    iyoumeweus: good conclusions.

    RickB: "Conservatives - and Tea Baggers especially - are rapidly destroying America as we watch." Yes. Yes, they are. And the media is enabling them.

  • Rick B on April 07, 2013 6:25 PM:

    @iyoumeweus

    Your observations are outstanding. I would have written my post a bit differently but you posted while I was off line preparing mine. I am going to print your observations and keep them for future reference.

    @c u n d

    Exactly right. The GOP is based on bankers and accountants who do not realize that financial statements for individual companies describe only the limited decisions those institutions are allowed to make. The structure of those rules is what permits organizations larger than a family business to exist.

    But those rules are established by and enforced by government or no company in the economy would follow them. The government establishes and enforced those rules on the smaller economic entities within the economy.

    That's what is causing the problems in the Euro Zone. The economically small countries like Greece, Cyprus, and Spain have not been forced to follow the rules that would allow the overall Euro to exist as a common currency.

    The banks especially in those three countries are unregulated and went wild and their hapless and ignorant governments permitted the idiocy. It's exactly the same thing the Wall Street Banks did here.

    The Wall Street Banks caused the Great Recession while Greece, Cyprus and Spain will take the Euro down - and perhaps create a worldwide Depression - if they are not brought to heel. The Germans, however, are using banker financial rules, not the rules of the real economy as Krugman has been describing for the last five or so years.

    In an economy you cannot separate the actions of producers from the consumers. Consumption drives the economy and permits it to grow. If you starve the producers of money you are also starving the workers who are the consumers, so the government as to borrow money and step in the keep the consumers afloat and keep markets in existence. Otherwise, the producers will just shut down, lay off the workers/consumers and the whole damned economy chugs to a stop.

    It is perfectly safe and reasonable to borrow money to keep the consumers purchasing so that producers have markets to sell into and hire to support. You just have to avoid letting interest rates get too high too fast.

  • zandru on April 07, 2013 6:43 PM:

    Pardon this digression, but what, exactly, is this "American Dream" that the pols are so big on? I'm serious: in my experience, it's always referred to as if everyone knows what it is, and there's no need to explain.

  • Joe Friday on April 07, 2013 9:49 PM:

    Bernie Sanders now saying he will block any legislation in the Senate that cuts Social Security.

    BAM.

  • emjayay on April 07, 2013 10:40 PM:

    It's not that complicated. It's simple supply and demand. If unemployment is 3%, you will see adverts saying "will train". If unmemployment is 6% (not that different) you will see "college degree required" for the same position. And maybe almost all the applicants will not be hired. Guess what situation capitalistic enterprise prefers? Wages in free enterprise capitalism are also determined by supply and demand.

  • square1 on April 08, 2013 11:46 AM:

    At long last, can we now admit that the liberal economic policies of the past 4 years have been an abject failure? It is time for Big Government to stop holding corporate America back from unleashing prosperity across the land.

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