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Unemployment and Social Problems Likely for the Long Haul

By Wes Riddle  

April 19 2010

Some economic indicators have thankfully ticked up lately.  The stock market rallied some and job losses have slowed.  The economy grew a little over two percent in the third quarter last year, the first real increase in two years. 

 Since the Great Recession started officially in 2007, it sure has taken its time.  Indeed, every recession since the 1980s has taken longer for us to get out of.  Even so, the downturns before 2007 did not result in chronic unemployment or rates of unemployment above 8 percent.  So that puts our current recession in a different category for length and for depth.  It truly is the worst economy the United States has experienced since the Great Depression.  In October 2009 the unemployment rate hit 10 percent, and even Government statistics predict the unemployment rate will remain above 9 percent for four to five more years.  No wonder the administration wants 26 year olds to be able to keep their parents’ health insurance coverage.  They’re likely to be living at home anyway. 

Unemployment sounds so clinical concerning the economy, a mere statistic.  People are involved certainly, but if it is only a temporary phenomenon in life like the flu, well there’s arguably no lasting harm done.  The fact is that more people are experiencing unemployment and for longer periods of time.  The average duration of unemployment has crept up to more than six months, the worst since the Bureau of Labor Statistics started keeping track after World War II.  Moreover, the problem is that our recovery isn’t looking so good and the turn-around is hardly built on solid ground.  Chronic unemployment has already started, and sociologists are observing in white working class neighborhoods the onset of blight, as well as crime, drug and welfare problems resembling black ghettos of some forty years ago.  Deputy Managing Editor of The Atlantic, Don Peck calls the new jobless reality a “slow-motion social catastrophe.” 

The economy lacks 10 million jobs now just to get us down to 5 percent, the rate we had when the Great Recession started.  Of course, given the natural and not-so-natural immigration growth rate of people who need work, we would have to produce 1.5 million jobs each year just to stay even.  That’s about 125,000 jobs per month to stay in the hole we’re in.  What we need is about 600,000 jobs per month, so that we can start to dig out of recession and high unemployment—and it would still take us a couple years to do so!  Of course, the problem is we haven’t seen that kind of a sustained employment growth rate for more than 30 years and aren’t likely to do so very soon.  In the intervening years we’ve also sold out our manufacturing base.  New jobs are lower paying, and typically they are in the services industry. 

According to economist Edmund Phelps, the innovative potential of the U.S. economy looks limited.  Dynamism in the U.S. economy has actually been in decline for the past decade, according to a recent article he wrote with Leo Tilman in Harvard Business Review.  Phelps also believes the best that we can hope for is an unemployment floor of between 6.5 and 7.5 percent, even after the so-called recovery is complete.  In 2014 unemployment will likely remain at 8 percent.  This is the same as Obama’s inundated high water mark, the level at which he predicted should be our worst. 

The impact is that a generation of young people could see their life chances and accomplishments diminished by this recession.  Statistics bear out that first jobs have an inordinate impact on career path and lifetime earnings.  Extended periods of unemployment or underemployment moreover tend to reduce people’s confidence and ambition; raise stress levels; and correspondingly reduce lifespan and good health.  America is likely to experience social problems attributable to the Great Recession, more so than usual because young adults today are temperamentally unprepared for what they now face in the job market.  Jean Twenge is Associate Professor of Psychology atSan Diego State University and author of the book Generation Me (2006).  After analyzing national survey data, she concludes that many high school graduates in the 2000s have a toxic combination of attitudes.  While they value financial success and have very high material expectations, they do not have as intense work ethic as do previous generations.  They have high self-esteem and also fully expect their jobs to cater to personal interest and lifestyles, but they lack the instinct to persevere in hard times.  They are more likely to quit or change jobs, and also to turn down starter positions and first time opportunities. 

For men especially, chronic unemployment acts in ways similar to bereavement.  It can leave psychological scars and make married life untenable for them and their spouses.  Indeed, it is another troubling aspect about this recession, that male-dominated industries such as construction, finance and manufacturing have been the hardest hit; whereas sectors that disproportionately employ women, such as education and health care, have held up pretty well.  Men between the ages of 25 to 54 (prime working age) are experiencing an unemployment rate of more than 19 percent, again the highest since the Bureau of Labor Statistics started tracking.  It is possible that in 2010 for the first time in American history, women could hold the majority of jobs.  For those looking out at Tea Party rallies and observing angry, mostly white men and traditional working-class and Middle Americans protesting, some for the very first time, it is small wonder. 

_____________________

Wesley Allen Riddle is a retired military officer with degrees and honors from West Point and Oxford.  Widely published in the academic and opinion press, he ran for U.S. Congress (TX-District 31) in the 2004 Republican Primary.  Article loosely based on essay by Don Peck in The Atlantic magazine (March 2010).  Email:wes@wesriddle.com

 

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