Friday, December 3, 2010

Unemployed, and Likely to Stay That Way

From the NY Times. Looks like people are going to have to come to grips with reality--the 1-income family is here to stay, and so is frugality. What's coming to stay along with it: high food prices and the introduction of food sold by the kilo instead of the pound.

"The longer people stay out of work, the more trouble they have finding new work. That is a fact of life that much of Europe, with its underclass of permanently idle workers, knows all too well. But it is a lesson that the United States seems to be just learning."


"So the legions of long-term unemployed will probably be idle for significantly longer than their counterparts in past recessions, reducing their chances of eventually finding a job even when the economy becomes more robust.

“I am so worried somebody will look at me and say, ‘Oh, he’s probably lost his edge,’ ” said Tim Smyth, 51, a New York television producer who has been unable to find work since 2008, despite having two decades of experience at places like Nickelodeon and the Food Network. “I mean, I know it’s not true, but I’m afraid I might say the same thing if I were interviewing someone I didn’t know very well who’s been out of work this long.”

Mr. Smyth’s anxieties are not unfounded. New data from the Labor Department, provided to The New York Times, shows that people out of work fewer than five weeks are more than three times as likely to find a job in the coming month than people who have been out of work for over a year, with a re-employment rate of 30.7 percent versus 8.7 percent, respectively.

Likewise, previous economic studies, many based on Europe’s job market struggles, have shown that people who become disconnected from the work force have more trouble getting hired, probably because of some combination of stigma, discouragement and deterioration of their skills."


"Several factors lead to this downward spiral of the unemployed.

In some cases, the long-term unemployed were poor performers in their previous positions and among the first to be terminated when the recession began. These people are weak job candidates with less impressive résumés and references.

In other instances, those who lost jobs may have been good workers but were laid off from occupations or industries that are in permanent decline, like manufacturing.

But economists have tried to control for these selection issues, and studies comparing the fates of similar workers have also shown that the experience of unemployment itself damages job prospects.

If jobless workers had been in sales, for instance, their customers might have moved on. Or perhaps the list of contacts they could turn to for leads is obsolete. Mr. Smyth, for example, says that so many of his former co-workers have been displaced that he is no longer sure whom to call on about openings.

In particularly dynamic industries, like software engineering, unemployed workers might also miss out on new developments and fail to develop the skills required.

Still, this explanation probably applies to only a small slice of the country’s 6.2 million long-term unemployed."

Could it be that too many people were gratuitously hired in the first place...maybe even for the tax credits?

"It does not help when job seekers are repeatedly rejected — or worse, ignored. Constant rejection not only discourages workers from job-hunting as intensively, but also makes people less confident when they do land interviews. A Pew Social Trends report found that the long-term unemployed were significantly more likely to say they had lost some of their self-respect than their counterparts with shorter spells of joblessness.

“People don’t have money to keep up appearances important for job hunting,” said Katherine S. Newman, a sociology professor at Princeton. “They can’t go to the dentist. They can’t get new clothes. They gain weight and look out of shape, since unemployment is such a stressful experience. All that is held against them when there is such an enormous range of workers to choose from.”

That's why this would've been the prime opportunity to go back to school, but nobody saved any money for this rainy day, and has insufficient credit to finance it.

"Direct employment programs — like the public works projects of the New Deal and World War II — may be the fastest way to put people back to work, economists say. But those raise concerns of crowding out businesses and displacing other workers. Also the approach, which smacks of socialism to some, seems politically untenable at the moment.

One possible compromise might be broader-scale retraining and apprenticeship programs, suggests Lawrence Katz, a labor economist at Harvard.

“That’s better than having more people just go on disability as a last resort, and then basically never return to work in their life, which many will do,” he said. The Obama administration has recently thrown its support behind an effort to overhaul community college retraining programs.

“One of the reasons to focus on training for workers, even if you’re not training workers for new jobs, is that when you have workers who have not been in a job for a long time, you need to do all you can to get them to look and feel job-ready when the openings do eventually come back,” said Betsey Stevenson, the Labor Department’s chief economist.

The real threat, economists say, is that America, like some of its Old World peers, may simply become accustomed to a large class of idled workers.

“After a while, a lot of European countries just got used to having 8 or 9 percent unemployment, where they just said, ‘Hey, that’s about good enough,’ ” said Gary Burtless, a senior fellow at the Brookings Institution. “If the unemployment rates here stay high but remain relatively stable, people may not worry so much that that’ll be their fate this month or next year. And all these unemployed people will fall from the front of their mind, and that’s it for them.”

In the Italian town I lived in for 3 years, there were legions of card-players in the park: men who fell off the employment rolls some years back, and never got back on. I hear Britain's teeming with these sorts of people who are "perpetually on the dole" or never-ending welfare for generations. We already went there and did that, and thankfully found some sort of reform--more reform needs to happen, I think, because loopholes have been found and enlarged within the new system.

Meanwhile, here's what happened to the rest of the workforce--they either got replaced by software, off-shored, outsourced, or were gratuitous hires in the first place, and had no compelling reason to be kept around.


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