Americans Feel 15.6% Unemployment as Underemployment Surges
By Matthew Benjamin
Joseph Ramelo gave up searching for work in January to return to school, two months after he was laid off as a San Francisco election clerk. Antonio Poe is struggling to get by doing part-time landscaping in Greensboro, North Carolina, after losing his job as an electrician.
While such workers are feeling real pain from the recession that began in December 2007, they’re not represented in the 8.5 percent unemployment rate the Labor Department reported last week. They are part of a broader group that includes those who want a job but have stopped looking for work and those who want full-time positions but have to settle for part-time employment.
A measure of underemployment that counts those people has almost doubled over the past two years, to 15.6 percent, providing a more complete gauge of the labor market’s deterioration. Along with an historic drop in the percentage of the population who are working, and record numbers of long-term unemployed, the figures point to a permanent shift in employment patterns, said former U.S. Labor Secretary Robert Reich.
“We’re seeing many more people who are losing their connectedness to the labor force,” said Reich, who served in President Bill Clinton’s Cabinet and is now an economist at the University of California at Berkeley. “There is a profound weakening of ties to the labor market among a large portion of our working-age population.”
U.S. employers cut 663,000 jobs in March, bringing losses since the slump began in December 2007 to about 5.1 million, the worst in the postwar era, according to the Labor Department. Unemployment exceeds 10 percent in seven states. Michigan’s jobless rate is 12 percent, South Carolina’s is 11 percent and California’s is 10.5 percent.
Job losses in the current recession are more enduring than in previous ones, according to an April 3 research report by Credit Suisse.
“Permanent job losses are accounting for a much larger share of total job losses than any cycle in recent memory,” with almost half of unemployed workers “job losers” as opposed to temporary layoffs, according to the report.
The number of Americans who want full-time jobs but are working part time has increased 83 percent in a year to 9 million, according to Labor Department data.
Ken Hueser may become one of them. The Minneapolis architect lost his $60,000-a-year position in February and is applying for part-time work at garden centers for $8.50 an hour.
Sooner or Later
“The economy will come back some day, but the unknown is whether it’s sooner or later,” said Hueser.
In the meantime, said Ramelo in San Francisco, “even if I don’t have a job, at least I’ll have my degree.” He returns to his City Hall job temporarily later this month. “At this point, I’m thinking any income will do,” he said.
The increase in temporary workers is the result of a severe recession that coincides with a large drop in household wealth and a lack of access to credit, leaving laid-off workers without the cushion they might have had in a milder downturn, said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. “So people are doing whatever it takes to get some income for their households,” said Feroli.
Lisa Smith, a Trenton, New Jersey, childcare worker who lost her job last September, said she is now willing to take whatever work she can get.
“I would like to work 40 hours a week, but if someone offered me 30 or 35, I’d be glad too,” she said.
She and workers like her face greater competition, even for temporary jobs, because more people are out of work for longer periods. There are currently about four unemployed workers for every job opening, according to the Economic Policy Institute in Washington.
The long-term unemployed, those who have been out of a job for more than six months, constitute 24.2 percent of the unemployed, the largest share during a recession since the Labor Department began recording data in 1948.
“This recession is causing extreme desperation and frustration for a very wide swath of workers, even people who thought they were flexible and could find work again easily,” said Andrew Stettner, deputy director at the National Employment Law Project, a New York group that advocates for workers’ rights.
In addition, the downturn is undoing years of gains to overall employment. Beginning in the mid-1970s, the percentage of working-age adults who have jobs began to rise steadily as more women joined the workforce, from about 56 percent in 1975 to 63.4 percent in December 2006. It has since dropped 3.5 percentage points, the steepest decline in any recession since the Great Depression.
That drop has implications for the economy’s potential growth rate, because fewer workers, without a compensating increase in productivity, means less output.
“We’ve taken a huge step back here,” said James Glassman, senior economist at JPMorgan & Co. He said elevated levels of unemployment and underemployment are costing the economy about $1 trillion in gross domestic product a year.
“We’ve lost several decades of progress that was going on in terms of the people number of people coming into the workforce,” said Glassman.