Tuesday, September 23, 2014

Rutgers Study: Unemployment Worse than Previously Reported

* Editor's Note: Below in this post are some highlights I excerpted (with some bullet points and notes) from a recent 54-page report by the Heldrich Center for Workforce Development at Rutgers University in a study they did about long-term unemployment since the onset of the Great Recession. It appears that economic conditions for a broad swath of Americans are much worse than the media, economists and government officials have been reporting — most likely in their attempts to lift "consumer confidence" during a weak economic recovery — maybe to help generate more consumer spending and economic activity — to create more consumer demand in an economy fraught with "secular stagnation".

According to the new Rutgers report, since the Great Recession officially ended over 5 years ago in June 2009, they say that "while job growth has been consistent, it has been insufficient to produce enough full-time jobs for everyone who wants one." But yet, the Speaker of the House John Boehner recently said the jobless would "rather sit around" than look for non-existent jobs. (Is Speaker Boehner privy to economic data that the researchers at Rutgers University does not have?)

Arthur Delaney at the Huffington Post challenged Boehner's remarks in an article titled: "John Boehner Is Done Being Nice About The Unemployed" — just as Paul Krugman did at the New York Times in a post titled: "Those Lazy Jobless".

"The [political] right lives in its own intellectual universe, aware of neither the reality of unemployment nor what life is like for the jobless. You might think that personal experience — almost everyone has acquaintances or relatives who can’t find work — would still break through, but apparently not. Whatever the explanation, Mr. Boehner was clearly saying what he and everyone around him really thinks, what they say to each other when they don’t expect others to hear. Some conservatives have been trying to reinvent their image, professing sympathy for the less fortunate. But what their party really believes is that if you’re poor or unemployed, it’s your own fault."

/// End of Editor's Note

Excerpts from the Rutgers Report

Many of the jobs lost during the Great Recession were high- and middle-wage jobs, but most of the recovery’s job growth has been in low-wage occupations [and in temp and part-time jobs]. Involuntary part-time employment has grown from 4.4 million people in 2007 to 7.5 million people in June 2014.

The Heldrich Center’s survey finds that one in five workers — or nearly 30 million people — say they were laid off from a job in the past five years. Nearly 4 in 10 of these laid-off workers say they searched for a job for more than seven months before finding another one. But one in five workers laid off during the past five years never found another job. Of those who did find another job, one in four say it was only a temporary position.

And Americans who are currently unemployed and looking for new jobs are reporting similar experiences. Over one-third say they have not been able to obtain a job for more than seven months, indicating that the ranks of the long-term unemployed may remain high for months — if not years — even if the economy continues to slowly improve.

Over two million Americans [of the 3 million who are currently counted as long-term unemployed] have been unemployed for more than a year.

* Editor's Note: Currently there are 6.3 million working-aged jobless Americans who are not counted as "unemployed", but want a job. They are what the Bureau of Labor Statistics call "discouraged workers", and are no longer considered part of labor force (as either employed or unemployed) because they stopped looking for non-existent jobs. (See my post: 6.3 Million Unemployed not Counted in Jobs Recovery) Many of these people once called themselves the 99ers, because many once received up to a maximum of 99 weeks of federal extended unemployment benefits in some states — that is, before the number of weeks were reduced, and then eventually, completely eliminated all together by the end of December 2013.

The ranks of the [currently counted] long-term unemployed have fallen by 31% over the past year to 3 million. But many of those hired are in temporary or part-time slots, or full-time positions that pay less than their previous salaries. Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University, says, "I think it's a reflection of the work available to them. The labor market is changing."

Many employers have converted full-time jobs to part-time or temporary ones to increase efficiency and cut costs. Workers fortunate enough to land full-time jobs often take significant pay cuts. Forty-six percent of those who found jobs after being laid off said their new job pays less than their previous one.

Despite their struggles, many of the chronically jobless do not benefit from government assistance: Just 38% are receiving unemployment insurance. And of those who did get benefits, 83% lost them before finding another job.

Editor's Note: Remember, last December the federal government cut off benefits beyond the 26 maximum weeks provided by most states. In North Carolina, for example, it's only a measly 14 weeks.

(From page 12 of the Rutgers report: "A bare majority (54 percent) of those who were out of work in the past five years received unemployment benefits at some point. Moreover, for almost half of those who did obtain unemployment aid, their benefits ran out before they were able to find work. Sixty-five percent of the long-term unemployed who were laid off between 2009 and 2014 received unemployment insurance benefits; the same percentage saw their benefits expire before getting another job."

Editor's Note: In December of last year the White House reported that almost 24 million long-term unemployed Americans were out of work at least 6 months and received extended unemployment benefits from July 2008 to December 2013 — but Rutgers reported that only 54% of the unemployed had ever received any jobless benefits. The 24 million who received extended unemployment benefits would equate to 54% of an astonishing 44.4 million who were unemployed. This number is very close to previous estimates last year of 48 million unemployed. The JOLTS reports from the Bureau of Labor Statistics will give you a better understanding of the "churn" (turnover) in the job market, as they collect data for hires and separations (quits, layoffs and discharges). From their last report:

"Over the 12 months ending in July 2014, hires totaled 56.0 million and separations totaled 53.5 million, yielding a net employment gain of 2.5 million. These figures include workers who may have been hired and separated more than once during the year."

In contrast to the 99ers (meaning, anyone who received extended federal benefits), only 38 percent of those who are currently experiencing a period of long-term unemployment had initially received any state unemployment insurance benefits (up to the maximum of 26 weeks in most states). Eighty-three percent of those who did obtain government assistance, had exhausted all their jobless benefits before finding another job — which reflects the elimination of the federally funded extended unemployment insurance benefits in late 2013. So no, as a recent Federal Reserve study shows, unemployment benefits does not cause unemployment. Just as Paul Krugman recently noted in a post at the New York Times titled: Return of the Bums on Welfare: "Even if you believed that expanded unemployment benefits were somehow a cause rather than an effect of the economic crisis, those expanded benefits are long gone ... The right is railing against the bums on welfare, not only when there aren’t any bums, but when there isn’t any welfare."

The Rutgers report also notes that two-thirds of laid-off workers who did manage to find another job, have said that their new jobs either paid less than their previous one (46 percent) or paid the same (21 percent). And 44 percent of these "re-employed" workers say their new job was a step down for them compared to what they were doing five years ago.

Long-term unemployed workers are represented in all age categories, educational levels, regions of the nation and income strata. But a higher number of Americans between the ages of 45 and 59 say they have been out of work for longer than six months during the past five years (just as a higher number of blacks have also been disproportionately long-term unemployed).

* Editor's Note: If these workers had the bad fortune to be laid off (or were between jobs) during the mass-layoffs in late 2008 and early 2009, they already had the distinction of being defined as "long-term unemployed" long before the Great Recession had officially ended — and long before the economy actually began seeing a net gain in job creation beginning in January 2010. According to the Rutgers report, the plight of the long term unemployed remains persistent and still remains above pre-recession levels in 41 states.

Some Bullet Points from the Rutgers Study:

  • More than 20% of Americans laid off the past five years are still unemployed.
  • One in four who found work is in a temporary job.
  • Two-thirds of all adults said the recession hurt their standard of living - and more than half of them think those changes are permanent.
  • Almost half of workers who went through a layoff say their new jobs pay less than their previous jobs.
  • Forty-two percent say they have less in savings than when the recession started.
  • Approximately one-half of employed Americans and 61 percent of the long-term unemployed do not expect their finances will improve in the next few years.
  • More than 4 in 10 employed Americans — and 55 percent of the long-term unemployed — say that hard work and determination do not guarantee success in America.
  • More than 40 percent of unemployed workers sold some of their possessions to make ends meet.
  • More than a third borrowed money from friends or family.
  • One-third of the long-term unemployed and a quarter of regular unemployed moved in with friends or family.

Editor's Note: Recently from a speech by Fed Chair Janet Yellen, she said, "I'd like to cite a few numbers from the Federal Reserve's 2013 Survey of Consumer Finances ... The median net worth reported by the bottom fifth of households by income was only $6,400 in 2013. Among this group, representing about 25 million American households, many families had no wealth — or had negative net worth. The next fifth of households by income had median net worth of just $27,900 [most of this was in home equity, not retirement plans or other assets]. These numbers represent declines from 2010 ... The bottom half of families [50% of all U.S. households] by income held only 8 percent of all financial assets held by households ... According to the Board's recent Survey of Household Economics and Decisionmaking, an unexpected expense of just $400 would prompt the majority of households to borrow money, sell something, or simply not pay at all."

(From page 10 of the Rutgers report) The Great Recession also affected retirement plans for millions of Americans. 47 percent of employed Americans say they were forced to alter their original plans, with most of those (44 percent) saying it caused them to retire later than planned. Among the long-term unemployed, the impacts were even greater:

  • 55 percent say they would need to retire later than planned because of the recession.
  • 53 percent of 45- to 59-year-olds say they now expect to retire later than they originally planned.

(Editor's Note) From a recent report from the United States Government Accountability Office (April 2014) "A greater share of those who reported being retired, unemployed, or otherwise out of the labor force claim early [Social Security benefits] — particularly for those who claim at age 62. As we have previously reported, many unemployed older workers struggle to find new jobs and may face unique reemployment challenges, such as employer reluctance to hire older workers or out-of-date skills. And, long-term unemployment can motivate older workers to claim early Social Security benefits." --> From an earlier report from the United States Government Accountability Office (April 2012) "The number of workers age 55 and over experiencing long-term unemployment has grown substantially since the recession began in 2007...Long-term unemployment can motivate older workers to claim early Social Security retirement benefits, which will result in lower monthly benefits for workers and their survivors for the rest of their lives."

(From page 12 of the Rutgers report) Only 28 percent of the long-term unemployed received assistance from the Supplemental Nutrition Assistance Program, more commonly known as Food Stamps.

In the Rutgers conclusion, they report that "nearly one in four say they had been either devastated or diminished by their experiences of the Great Recession."

Editor's Note: From the Washington Post (September 2014) America’s top execs seem ready to give up on U.S. workers: "Three-quarters said their firms would rather invest in new technology than hire new employees. More than two-thirds said they’d rather rely on vendors for work that can be outsourced, as opposed to adding their own staff. A plurality said they expected to be less able to pay high wages and benefits to American workers." (But Speaker of the House John Boehner recently said the jobless would "rather sit around" — rather than wait for his "job creators" to advertise their non-existent jobs.)

A Related Topic

There's no “skills gap” — just the opposite — because the average worker and job candidate has more education than their current job requires. From a study at VOX (Regarding a skills gap vs. skills mismatch).

Many high-paying jobs in the US cannot be filled, raising concerns about an existing skills gap. However, this column does not find evidence in support of serious skills gap or shortages in the US labor force ... The prevailing situation in the US is due to skill mismatches ... Virtually all the evidence used to support the skills gap idea comes from employers, either via anecdotes, proprietary surveys from consulting firms, or industry associations [pro-business trade groups like the Business Round Table and the U.S. Chamber of Commerce] ... the fact that the unemployment rate for college grads is much lower than for high school grads does not necessarily imply that there are many more jobs requiring college level skills, as college grads can and are taking jobs that require only high-school skills.

Employers are taking longer to fill vacancies, and while that might be consistent with the idea that there are problems with applicants, we do know that they have also cut back on their recruiting efforts, which would explain longer search times. We also know that job searches have changed substantially since the US last experienced unemployment at current levels, and the move to online and computer-based hiring makes searching much cheaper for employers, which should lead them to do more of it.

The absence of any upward pressure on wages is strong evidence that hiring challenges are at least not yet a serious burden for employers ... The most promising hypotheses point to changes in employer behavior, specifically greater use of outside hiring and the preference for hiring those currently employed. Overall, the available evidence does not support the idea that there are serious skill gaps or skill shortages in the US labor force. The prevailing situation in the US labor market continues to be skill mismatches — where the average worker and job candidate has more education than their current job requires.

2 comments:

  1. I'm trying to reconcile these numbers to determine how many college grads we have every year, who then would most likely attempt to enter the labor force looking for a job (telling us how many new jobs will be needed every year.)

    From the Bureau of Labor Statistics: Last year, of the 3 million 2013-14 high school grads, 2 million went to college.
    http://www.bls.gov/news.release/hsgec.nr0.htm

    From the National Center for Education Statistics
    http://nces.ed.gov/fastfacts/display.asp?id=372

    During the 2014–15 school year, colleges and universities are expected to award:
    1.0 million associate’s degrees
    1.8 million bachelor's degrees
    821,000 master's degrees
    177,500 doctor's degrees
    3.8 million total

    In 2011–12, postsecondary institutions awarded:
    1.0 million certificates below the associate’s degree level
    1.0 million associate’s degrees
    1.8 million bachelor’s degrees
    754,000 master’s degrees
    170,100 doctor’s degrees
    4.7 million total

    ReplyDelete
  2. UPDATE TO COMMENT ABOVE:

    Bloomberg: "The number of men enrolled in degree-granting post-secondary education declined to 8.92 million in 2012 from the record high of 9.04 million in 2010, according to data from the Washington-based National Center for Education Statistics."

    Bloomberg link:
    http://www.bloomberg.com/news/2014-09-18/missing-men-in-u-s-workforce-risk-permanent-separation.html

    National Center for Education Statistics link:
    http://nces.ed.gov/programs/digest/d13/tables/dt13_303.10.asp

    QUESTION: How many net new jobs do we need to create every year to employ college grads, high school grads that didn't go to college, high school and college dropouts, and those who leave the military?

    ReplyDelete