Monday, March 9, 2015

Forced Out of the Labor Market

The highest-paid talking heads on the big cable news channels have been misreporting to millions of gainfully employed Americans that the labor force participation rate has been declining because: “People are leaving the labor force because they think they can’t find a job.”

Not true at all. This is a myth that needs to be debunked.

This false reporting by the media might lead many good hard-working working people to believe that all these “lazy slackers” haven’t really been looking for work, and that instead, they might only be looking for a hand-out. This misrepresentation of the unemployed harms them that much more — with reduced jobless benefits and cuts in other social programs.

Please allow me make two points: First of all, most people aren’t “leaving” the labor force, they are being “forced out”. Most of the exceptions would be retirees, and the small percentage of disabled people — but even many of them would also prefer to work, if a job were offered to them.

Second, people don’t just “think” they can’t find a job; past experience most likely led most of them to believe (and for good reason) that they can’t find a job — so after a while of fruitless searching with no positive results, when they respond to the U.S. Census survey, they might say they “stopped looking” for work — and it’s only then that they are reported as “dropping out” of the labor force.

Many people have retired early, taking reduced Social Security benefits, because generally speaking, older workers (over 50) are passed over for rehire. Then these jobless workers eventually become “long-term unemployed” — who are also passed over for rehire (a double whammy, both older and long-term unemployed).

If older workers are lucky, and reach 62 before ending up homeless (or much worse), they might opt for early retirement  — just to have any income at all. And a slight percentage of disabled people, while they might legally quality for disability benefits under the current law, some would also prefer a job that pays more than the meager benefits they receive if they could only find work (work that they could do, and if the jobs were available).

As it is now, according to the NCES, a research arm of the U.S. Education Department, we have an average of 3 million young people graduating from high school every year (not including college grads or those who drop out of school). The Bureau of Labor Statistics reported that only 48.8% of high school grads were either working or looking for work.

65 percent of college graduates are showing up on their parents’ doorsteps looking for free room and board while they’re looking for work. The L.A. Times reported that college-educated workers are taking jobs that don’t require degrees. As the economist Mark Thoma notes:

The number of young Americans living with their parents has grown over the last 15 years. Some have returned home after striking out on their own (earning the nickname “the boomerang generation”), while others never left at all … In 1999, approximately 30 percent of 25-year-olds lived with their parents — but by 2013 the percentage had risen to nearly 50 percent … It has become more difficult for the young to get an education, strike out on their own, and not have to rely on their parents for support. And there’s little reason to suspect this trend will end any time soon.

Currently, we have a record number of people who are “not in the labor force” (almost 93 million*) — over 11 million just since June 2009 when the recession was “officially” declared over — about the same number of jobs that were created during that same period of time — and many were temp and part-time jobs. (* 6.5 million of those say they want a job)

Now we have the new CBO director who falsely claimed last year that 90% of our potential prime-age workers are going on disability; and the Republicans are falsely claiming rampant fraud and accounting gimmicks in the disability program; so now they are trying to cut the disability benefits, which mostly benefit older disabled workers with long work histories.

On top of that, Congress allowed federal employment benefits to expire at the end of 2013 for the long-term unemployed (that once lasted up to 99 weeks in some states with high unemployment rates). And (mostly Red States) have also been cutting state benefits as well (as few as 12 weeks in North Carolina). The Republicans have falsely claimed that cutting unemployment benefits somehow caused more jobs to be created (than otherwise might have been).

Also, food stamps have been severely cut and the Republicans are looking to cut even more. Some governors (in mostly Red States) have also proposed drug-testing for these programs — all because of the misperception that the American people have (thanks to the media) of our unemployed being nothing more than “lazy slackers”.

The bottom line: There are not enough jobs for able-bodied prime-age workers, even as older workers have been working longer (if they weren’t laid off during the Great Recession, or were, but also managed to find re-employment).

And most people don’t just casually and voluntarily “leave” the labor force (and a Gallop poll shows, even after they hit a lottery) — so people don’t just blissfully wander off into the La-La Land of the labor force dropouts — just because they “think” they might not get hired if they ever tried to apply for a job.

It’s more like “doing the same thing over and over again and expecting different results.” If someone eventually determines what the final outcome will end up being after all their efforts and job searches, they might just finally understand their circumstances and accept their fate (If you use the U-6 rate, here's still only one job for every 3 or 4 unemployed.)

It’s also worth noting that, besides just food and shelter (preferably, with running water and electricity), it also takes phone service, an internet connection and gasoline in their car to look for work. If their gas tanks run dry, they might also drop out of the labor force.

But it wasn’t because they “left” the work force, but because they were shoved out of labor force — and are now running on empty and living on a prayer.

1 comment:

  1. UPDATES --- March 29, 2015

    Robert Reich: Why College Isn’t for Everyone (Sunday, March 22, 2015)

    "Not every young person is suited to four years of college. They may be bright and ambitious, but they won’t get much out of it. They’d rather be doing something else, like making money or painting murals.

    They feel compelled to go to college because they’ve been told over and over that a college degree is necessary. Yet if they start college and then drop out, they feel like total failures.

    Even if they get the degree, they’re stuck with a huge bill — and may be paying down their student debt for years. And all too often the jobs they land after graduating don’t pay enough to make the degree worthwhile. Last year, according to the Federal Reserve Bank of New York, 46 percent of recent college graduates were in jobs that don’t even require a college degree.

    The biggest frauds are for-profit colleges that are raking in money even as their students drop out in droves, and whose diplomas are barely worth the ink-jets they’re printed on.

    [After making all his relevent points, he concludes] It’s time to give up the idea that every young person has to go to college, and start offering high-school seniors an alternative route into the middle class.

    When a Summer Job Could Pay the Tuition