How mass unemployment is devastating lives in the US while the federal and state governments continue their austerity policies. --PG
November 16, 2013
By ANNIE LOWREY
On a cold October morning, just after the federal government shutdown came to an end, Jenner Barrington-Ward headed into court in Boston to declare bankruptcy.
It took weeks to put the paperwork together, given that her papers and belongings were scattered across the country — there was a broken-down car and boxes of paperwork in Virginia Beach, clothes in Colorado and personal possessions at a friend’s house in Somerville, Mass. She managed to estimate her income — maybe $5,000 last year, but maybe half that this year — from odd jobs. Soon, she would officially have nothing.
It has been a painful slide. A five-year spell of unemployment has slowly scrubbed away nearly every vestige of Ms. Barrington-Ward’s middle-class life. She is a 53-year-old college graduate who worked steadily for three decades. She is now broke and homeless.
Ms. Barrington-Ward describes it as “my journey through hell.” She was laid off from an administrative position at the Massachusetts Institute of Technology in 2008; she had earned about $50,000 that year. With the recession spurring employers to dump hundreds of thousands of workers a month and the unemployment rate climbing to the double digits, she found that no matter the number of résumés she sent out — she stopped counting in the thousands — she could not find work.
“I’ve been turned down from McDonald’s because I was told I was too articulate,” she says. “I got denied a job scrubbing toilets because I didn’t speak Spanish and turned away from a laundromat because I was ‘too pretty.’ I’ve also been told point-blank to my face, ‘We don’t hire the unemployed.’ And the two times I got real interest from a prospective employer, the credit check ended it immediately.”
For Ms. Barrington-Ward, joblessness itself has become a trap, an impediment to finding a job. Economists see it the same way, concerned that joblessness lasting more than six months is a major factor preventing people from getting rehired, with potentially grave consequences for tens of millions of Americans.
The long-term jobless, after all, tend to be in poorer health, and to have higher rates of suicide and strained family relations. Even the children of the long-term unemployed see lower earnings down the road.
The consequences are grave for the country, too: lost production, increased social spending, decreased tax revenue and slower growth. Policy makers and academics are now asking whether an improving economy might absorb those workers in time to prevent long-term economic damage.
“I don’t think we know the answer,” said Jesse Rothstein, an economist at the University of California, Berkeley. “But right now, I think everybody’s worst fears are coming true, as far as we can tell.”
Soon after we first talked in October, Ms. Barrington-Ward left her sister’s house in Ohio, where she had crashed for six weeks, and went back to Boston and filed her bankruptcy paperwork. She contacted a headhunter. “I’ve got to get a job,” she said. “I just have to.” She had two job interviews lined up and her fingers crossed.
Long-term joblessness — the kind that Ms. Barrington-Ward and about four million others are experiencing — is now one of the defining realities of the American work force.
The unemployment rate has fallen to 7.3 percent, down from 10 percent four years ago. Private businesses have added about 7.6 million positions over the same period. But while recent numbers show that there are about as many people unemployed for short periods as in 2007 — before the crisis hit — they also show that long-term joblessness is up 213 percent.
In part, that’s because people don’t return to work in an orderly, first-fired, first-hired fashion. In any given month, a newly jobless worker has about a 20 to 30 percent chance of finding a new job. By the time he or she has been out of work for six months, though, the chance drops to one in 10, according to research by the Federal Reserve Bank of San Francisco.
Facing those kinds of odds, some of the long-term jobless have simply given up and dropped out of the labor force. So while official figures show that the number of long-term jobless has fallen steeply from its recessionary high of 6.7 million, many researchers fear that this number could mean as much bad news as good. Workers over 50 may be biding their time until they can start receiving Social Security. Younger workers may be going to school to avoid a tough job market. Others may be going on disability, helping to explain that program’s surging rolls.
Stan Hampton, 59, a veteran of the Iraq war, is now earning his associate degree. But he has not had a job since returning from active duty in 2007, and is now living in an apartment complex for veterans near Las Vegas.
“I’m just trying to hang on until my retirement kicks in,” he said, though he stressed that he would still look for a job. “I have not been in jail or prison, nor am I an alcoholic, drug addict or gambling addict. I am simply old, unemployed and out of money.”
To answer the question of whether the improving economy might help people like Mr. Hampton and Ms. Barrington-Ward, economists often phrase the question as “Is it structural or cyclical?” Cyclical unemployment is temporary, caused by a slack economy. Structural unemployment stems from a mismatch between what businesses want and what workers offer. You are a car mechanic, for example, but the economy needs programmers.
If long-term joblessness is cyclical, a growing economy should bring people back into the job market. But if structural factors are at play, the concern is dire for the whole economy, with a normal unemployment rate “significantly higher than what has been achieved in the past,” said Janet L. Yellen, the presumptive new Federal Reserve chairwoman, in a speech this year.
Right now, most economists argue that unemployment remains primarily cyclical. Ben S. Bernanke, the departing Fed chairman, made this point last summer, adding that an unemployment rate in the 5 percent range — an indication of a healthy economy — was still obtainable. Growth simply hasn’t proved strong enough to spur businesses to hire all the people who want jobs.
Economists come to this conclusion in part because there is no evidence that the long-term jobless are accumulating in any one industry, which would be a signal that the economy needs to move workers from, say, manufacturing into nursing. Long-term unemployment has hit workers young and old, of all industries, races and backgrounds. But the long-term jobless actually tend to be more educated. And long spells of joblessness have hit black workers especially hard, as well as single parents, the disabled and older workers.
With time, however, even people with desired skills can become “structurally” unemployed. Longer spells of unemployment become harder to explain away. Jobless workers’ skills can atrophy. Job seekers find it harder to appear eager. Wounds become scars.
After she lost her job, Ms. Barrington-Ward lived off her 99 weeks of unemployment benefits. Two years ago, she had to give up the house she shared with friends outside Boston. She cannot get Medicaid because she does not have a fixed address. She has no car to get around. She does freelance “intuitive” readings, similar to psychic readings, and web production work. A jobless friend committed suicide.
She tries not to let those strains show, but she describes the experience as wearying. “After working since I was 15, I have nothing to show for it,” she said.
“She’s brilliant,” said Allyson Hartzell, a longtime friend with whom Ms. Barrington-Ward is currently staying. “She gets up in the morning. She has her tasks. She’s always working on her personal projects, trying to generate money. She goes to job interviews. She keeps herself in shape.”
Ms. Hartzell continued: “I think it’s emotionally difficult to handle so much rejection, and I think others sometimes feel she needs to justify why she’s in the position she’s in.”
Economists have long thought that the strain of unemployment, plus the erosion of skills and loss of contacts that naturally occur, helps explain the “structural” unemployed in a nation’s work force. But new evidence shows that bias plays a much larger role than previously thought. Some of the long-term unemployed might never find work because businesses simply refuse to hire them.
In a recent study, Rand Ghayad a Ph.D. candidate at Northeastern University, sent out 4,800 dummy résumés to job postings. Those résumés that were supposedly from recently unemployed applicants with no relevant experience were more likely to elicit a call for an interview than those supposedly from experienced workers out of a job for more than six months. Indeed, the callback rate for the long-term jobless ranged from just 1 to 3 percent, versus 9 to 16 percent for newly unemployed workers.
Unemployment becomes a “sorting criterion,” in the words of a separate study with similar findings. It found that being out of a job for more than nine months decreased interview requests by 20 percent among people applying to low- or medium-skilled jobs.
In dozens of interviews, the long-term unemployed described discrimination as being foremost in their minds, though at the same time they said the experience of joblessness had changed them.
Robin Hastey, 53, who lives in Cornwall, N.Y., lost her job in 2009 and has not found steady work since. Her husband went through a spell of unemployment, but eventually found a job that paid half of what he made in the 1990s. They are deeply in debt, she said, estimating that they have about $100 in their bank account.
“We look older,” she said. “I’m not as cute. People aren’t as forgiving. When I was young, you could ask stupid questions and people would hire you anyhow. Now, you’re just a crazy old lady. There’s a lot less forgiveness in the marketplace.”
Still, the slack economy remains the primary culprit behind all the pain in the labor market, economists say. “We’ve got to be doing everything we can,” said Professor Rothstein at Berkeley. “That means direct hiring”— with the government providing jobs — “employment tax credits, just about anything you could think of.”
But the government is now doing the opposite. The mandatory federal budget cuts known as sequestration took as much as 60 percent out of unemployment checks this summer and fall. And, as of this winter, the federal emergency program that extends the maximum number of weeks of jobless payments will end, though the White House is pushing to extend it again.
Some fear that it may already be too late to prevent long-term joblessness from permanently scarring the American work force and broader economy. International Monetary Fund researchers estimate that the level of structural unemployment has increased significantly since the recession. And striking new Federal Reserve research shows that the scars from the recession have knocked the economy off its long-term growth trend.
For the long-term jobless, there is little to do but hope and wait. When I visited Ms. Barrington-Ward in November, she was planning to produce a show for Somerville Community Access Television. Unemployment itself consumes a lot of time. “I’ve been in seven states over the last five years, living with friends and family,” she said. “I usually stay somewhere for three weeks maximum. People want me to leave but don’t want to ask me to leave.”
She never got a second interview for one of the two positions for which she applied. She wrote a detailed plan for and had phone conversations about the other job, this one at a web start-up. She offered to work on a consulting basis. The company told her that it would go with a temp.
On a cold evening in Somerville, she sipped a mocha she had bought with a coupon. She had not given up — not quite. But she was disappointed that jobs hadn’t panned out. Again.
“I just know I’m not going to get another full-time job again,” she said. “It’s just so hard.” She had to leave her friend’s house soon. She did not know where she would go.