This is part five in a set of articles about the losers of the American economical crisis. The first article set out to describe the background to the later texts (including the connection to Peak Oil). In the previous text I wrote about those who have been hit by unemployment and evicted from their homes in Suburbia. In this text I go on to those desperately searching for a job on an ever tougher American labor market.
The labor market in the U.S. today is nothing short of a catastrophy. The official numbers indicate that almost 10% are unemployed (15 million people), but these numbers exclude those who want to work more but are underemployed, and those who have given up hope and do not even bother to search for a job any more (for example by retiring prematurely, or becoming unwilling housewives or -husbands. If these groups are included, the unemployment number ends up closer to 17%.
It is hardly surprising that the youngest on the labor market have been hit harder than any other group since they have the least experience, are fired first and are re-employed last. The numbers of teenagers who want a job but can’t find one are the highest in 60 years... and before 1948 no statistics were gathered. Youth unemployment is three times higher than in other groups on the labor market and half of all college graduates under the age of 25 have jobs that do not require college degrees (for example working in a clothing store or at Starbucks). These jobs used to be staffed by less qualified youth, and among young Americans between 16 and 24 that do not study at university or perform their military service, less than 50% have a job. (Youth unemployment has also reached record numbers in a number of European countries - Spain has the questionable honor of topping this list with 39% youth unemployment.) The consequences can be long-lasting, especially for the individual, but also for the American economy:
"the damage to a new career by a recession can last 15 years. And if young Americans are not working and becoming productive members of society, they are less likely to make major purchases -- from cars to homes -- thus putting the US economy further behind"
As I have written earlier, many older Americans fear that they have not saved enough money for their retirement, and therefore postpone it. As a consequence, there are fewer chances to advance within a company, and fewer spots opening up at the bottom of the hierarchy.
As unemployment rises, the U.S. military becomes a more attractive employer for many young Americans. In 2008, the U.S. military reached their recruitment targets figures for the first time since 2004 when the violence in Iraq intensified. A 22-year old man who signed up for eight years of service says that “Hopefully, when I get out, I’ll have all my fingers and toes and arms, and the economy will have turned around”.
Others who are unemployed try to shape up and sharpen their skills in writing CVs and networking and look for support and tips in ”job clubs” that meet in churches, libraries, restaurants and hotels. But the underlying harsh reality is impossible to ignore - the labor market is very difficult in the U.S. right not. The home of the American automotive industry might be worst of as Detroit now is a city that tops all unemployment statistic.
Whatever people did not like about their jobs before, be it the salary, the boss or maybe the work load - now pales in comparison with the prospect of losing it. Where people previously counted on routinely raising their salary with 10-15% when they switched jobs, salary cuts of 20% or more is now the norm. A survey showed that 65% of the unemployed are prepared to accept wage cuts up to 30% and that 7% were prepared to lower their salary demands with up to 40-50%.
The longer you have been unemployed, the bigger the cuts you are prepared to make in your salary, but ”those who do accept lower salaries in order to ride out the recession might find that they've permanently damaged their value in the workplace”. It might thus be the case that the picky Colt Phillips (whom I wrote about in my previous text on the effects of the crisis) is doing the right thing when he is not accepting the first job offer that appears. It is on the other hand more difficult to get a job if you have been unemployed for half a year or more. In the end of September almost 5 out of 15 million (officially) unemployed Americans found themselves in this situation.
For those who accept a lower salary it is a struggle to adapt to a situation with less money, and to be forced to accept a new identity. One example is the pilot and father of five Bryan Lawlor (great article) who lost 50% of his salary when the number of flights decreased and he was ”degraded” from pilot to first officer. For others it is a struggle even to find money to pay for the basics; rent, gas and food on the table. The margins can be very thin, for example for Rainie Uselton who managed to find a new job after she became unemployed, but who lost it when her car broke down and she did not have the money to fix it (since we are talking about the U.S. it goes without saying that you must have a car to get to work). The competition for available jobs harden and this also goes for the worst paid jobs. Beyond accepting a job with a significantly lower salary, many are now also prepared to commute on a daily or weekly basis, and leave their family behind.
“people are starting to move in a makeshift and impermanent fashion. […] There are costs to this strategy. Spouses left at home must do the work of both parents. Children miss out on things. Loneliness is a steady companion for the parent on the road. Researchers have long documented strains on families that are separated.”
The situation is obviously especially difficult for those with (small) children. At the same time as the number of unemployed Americans with unemployment benefits increased from 2.5 to 9.5 millions in two years, years of neglected maintenance have decreased the possibilities of the administrative systems to deal with the high demand and to hand out money to those who are due. Most states have computer systems that are to 30 years old and that use such ancient computer languages that retired programmers have been called back to work on adapting the software.
Hundreds of thousands have therefore had to wait for money they are entitled to for months. For someone without any margins, one week’s delay is enough to make them unable to pay the rent or buy food. For Kenneth Kottowitz, three months of waiting for the unemployment benefits meant that his savings ran dry, and that he lost his flat and was forced to move to a homeless shelter that was so crowded he had to sleep on the floor for the first couple of nights. A former hotel porter, Luis Coronal, had to wait six months for his money. He and his pregnant wife moved back to his mother, but in spite of this, there were periods when they couldn’t even afford to buy food. The worst day in his life was the day when his daughter was born and he had no money to buy her clothes.
Beyond the problems for some to get their unemployment benefits, the biggest cloud on the horizon for many Americans is that there is an end date beyond which the unemployment benefits are terminated. Millions of Americans have lost their jobs since the autumn of 2007 and at the end of the summer no less than 9 million Americans got unemployment benefits. The US Congress extended the period for which you could get support twice last year.
”States typically provide 26 weeks of unemployment benefits, an average of about $350 a week. Last year, Congress tacked on 20 extra weeks of benefits, and later it added 13 additional weeks for people in states hit hardest by unemployment.”
The 59 weeks limit (at the end of 2008) has further been extended twice this year. Citizens in the hardest hit states - with with unemployment numbers above 8% (almost half the states) were eligible for support up to 79 weeks (18 months). In September a decision was taken to further extend the limit with 13 additional weeks of unemployment benefits in severely affected states.
Whiteout this last extension, large groups were expected to fall out of the system from September and on (after more than a whole year of being unemployed). Many have no plans for how to deal with such a situation even if they might formally qualify for food stamps or social security. It is difficult to determine exactly how many people are affected. I have at different times seen estimates ranging from 750 000 to 1 500 000 people losing their benefits this year, but these numbers are now smaller (at least temporarily) after it was decided to extend the benefits.
"increasing numbers of people fall off the far end, beyond the duration of unemployment benefits. The worst hit states […] will have to pony up the most in additional benefits, as an estimated 1.5 million people will have exhausted all resources by Christmas. For some states, this must cause nightmares already. Especially since it won't stop in 2009; not even the most rose colored forecasters see a significant improvement in jobless numbers any time soon. […] we could see millions of long-time, structurally unemployed soon. A true underclass."
My guess is that the problem of individuals losing their unemployment benefits will escalate in the near future, in spite of predictions that the insurance period will be further extended next year (the last extension of 13 weeks lasts until the end of the year, but it does not apply to all states).
Another problem is that employers are usually careful about re-hiring even after a recession has officially ended. After the recessions both in the beginning of the 1990’s and the beginning of the 2000’s, the number of unemployed started to fall a full year after the economic recovery had begun. Except for the fact that no recovery has been sighted, many commentators seem to have the opinion that this time around we will have a ”jobless recovery” - meaning that the economy will eventually recover, but the number of jobs will not. For those who have lost their jobs, this would mean that there is no recovery at all. As always I want to add a brief note that we can not yet even speak with confidence about a recovery:
"I’m starting to wonder how many people there are left who actually believe all the talk about the economic recovery we're supposed to have entered. You know, the one proclaimed by governments, central bankers, institutions such as the IMF and the entire flock of parrots and parakeets that call themselves media [...] Surely many must have realized by now that perhaps that talk about a recovery is just that, talk."
Finally I want to draw the attention to those who have lost their jobs but do not live in the worst affected states, and therefore have not had their insurance period extended. Of the approximately 400 000 who were on the way to fall out of unemployment benefits in September, 300 000 benefitted from the recent extensions, but 100 000 did not. Also send a thought to those who were unlucky enough to lose their jobs right before the big wave of job cuts in the spring 2007 - and who ran out of benefits a long time ago. Where are they today...? We will turn to them next, in the following text about the effects of the crisis.
The topic is tough, but there is no way to avoid mentioning the fact that the number of suicides is expected to rise in the time ahead of us. The baby boom generation (who are between 45 and 60 years old now) have the highest suicide frequency among all age cohorts. Beside the fact that people are more prone to commit suicide as they age, this group has already had a higher frequency of suicide rates than previous generations - a fact explained by higher stress in the form of higher divorce rates, a more mobile lifestyle with more moving around throughout life, and a bigger intake of drugs. The economy is obviously one more stress factor and for sure it is worst for those who are alone, old and with bad or no health insurance. In a summary of the connection between economy, unemployment and suicide from the Suicide Prevention Center, it is stated that:
“Unemployment causes financial strain and can lead to depression and other problems as individuals perceive a loss of personal control. […] We can expect a sharp downturn in the economy to increase suicide risk, especially among working-age adults and older adults whose retirement security is threatened.”
While women attempt to commit suicide more often than men, men are more ”successful” in their attempts. In 2006, one year before the economical crisis hit, more than 33 000 took their own lives in the U.S. (75% of these were men).
This text has been about those fighting by whatever means they have at hand in order to (re)enter the American labor market, and who are prepared to take any job at any salary. In part six of this series I will write about those who are even worse off and need help with the basics - like food.
This text was originally published in Swedish on November 4, 2009.