TOPICS > Economy

Non-Working Numbers

July 29, 2003 at 12:00 AM EST
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UNEMPLOYED MAN : I need a job, for real.

UNEMPLOYED MAN: Yes.

UNEMPLOYED MAN: Help us out.

UNEMPLOYED MAN: After today — no, right now, I’ll be looking for a job.

PAUL SOLMAN: The official unemployment rate among young inner city men no longer in school: A stunning 35 percent. And indeed, not one of these Chicago twenty-somethings had worked in the past year, giving them much in common with David Jones, who has advanced degrees in engineering and business.

PAUL SOLMAN: Where did you go to business school?

DAVID JONES: University of Chicago.

PAUL SOLMAN: University of Chicago?

DAVID JONES: Mm-hmm.

PAUL SOLMAN: Doesn’t get much better than that.

DAVID JONES: So I understood. Yeah, no, it’s an excellent program. So let’s see what that does…

PAUL SOLMAN: Jones lost his financial consulting job more than a year ago. He’s doing work for a friend in real estate, on spec.

DAVID JONES: I was just caught in the economic downturn, and hopefully things are going to start looking better.

PAUL SOLMAN: When the government adds the white-collar unemployed to out-of-work urban youth, plus the manufacturing workers who’ve borne the brunt of the recession and jobless recovery, it comes up with an average official unemployment rate of 6.4 percent, highest in a decade, and more than 50 percent higher than it was just two years ago. Now, there is a positive way to look at it. Today’s 6.4 percent is nowhere near the post-depression record of 10.8 percent, set back in the recession of 1982. Chicago-based John Challenger, however, in the outplacement business since the early ’80s, says unemployment is much worse than the official number suggests.

JOHN CHALLENGER: 6.4 percent only tells the first part of the story. There are discouraged workers. There are people who have been marginalized, and that puts unemployment up over 12 percent.

PAUL SOLMAN: 12 percent?

JOHN CHALLENGER: They’re being pushed out of the workplace. They’re being deskilled. The problem is much deeper than it looks.

PAUL SOLMAN: John Challenger’s extreme claim, first made to us on the phone, is what motivated this story, and what we came to Chicago to explore: That today’s unofficial unemployment rate is much higher than the official 6.4 percent. And in fact, what we found suggests that for men in the workforce, today’s number actually rivals the 10.8 percent record of 1982, because, it turns out, there are four factors suppressing today’s official number, at least for men: Millions more discouraged workers than there were in 1982; millions more on disability; nearly 1.5 million more incarcerated men; and finally, there’s a demographic factor. Today’s is an older workforce. To make it comparable to 1982, the economists we spoke with would adjust today’s number upward for that reason alone. And the same is true for each of these categories. Take discouraged workers, who aren’t officially counted as unemployed unless they say they actively looked for work in the past four weeks.

DAVID JONES: I bet I would have been one of those people who was not counted in the unemployment statistics. I dropped out for a little while, and now I’m back in it full time.

PAUL SOLMAN: Was David Jones a discouraged worker?

DAVID JONES: I was not distraught by any means, but the job market was pretty tough, and… particularly in Chicago. So I was not looking for a little while.

PAUL SOLMAN: Neither, says Jones, were many of his friends. So they’re what the government calls discouraged workers: Not officially unemployed, but out of the workforce entirely, as all of these young men were.

RICARDO HUGHES: I’ve tried to find jobs so many times-filled applications, but I never get no response or nothing, so…

PAUL SOLMAN: Have you looked for work in the last four weeks?

RICARDO HUGHES: No.

PAUL SOLMAN: Have you looked for work in the last four weeks?

CLIFF CASH: No. I basically… really honestly, I gave up.

PAUL SOLMAN: Have you looked for work in the last four weeks?

UNEMPLOYED MAN: I mean, nowadays, it’s just… man, it’s just hard, basically.

DARIUS PRICE: Like 80 percent of black males that’s 25… from 17 to 25 is unemployed.

UNEMPLOYED MAN: Yeah, basically.

DARIUS PRICE: And that might… the number might be too low. It might just be 99.9.

PAUL SOLMAN: Now you could argue that if these young men — none with college; two of them high school dropouts — were willing to do anything, they could find a job. For our purposes, however, what matters is not why they aren’t working, but that they’re not being counted as unemployed. Remember, the official unemployment rate for young men like this is around 35 percent. If their jobless rate is actually higher, that means the official rate is unrealistically low. And to them you have to add the white-collar discouraged.

JOHN CHALLENGER: Over two million people have been out of work 27 weeks. That’s double the number of people it was two years ago. Right now we’re seeing search times just under four-and-a-half months. That’s the longest we’ve seen since we began tracking the numbers in the mid-’80s.

PAUL SOLMAN: And the longer the job search goes, says John Challenger, the more discouraged a worker tends to get.

JOHN CHALLENGER: That’s one of the biggest difficulties people who’ve been out of work for more than 27 weeks have, is companies begin to say, “why hasn’t someone else hired you?”

PAUL SOLMAN: So it’s like a house that’s been on the market too long.

JOHN CHALLENGER: People who’ve been out of work for so long are exactly like homes on the market that are not selling, and everybody starts passing them by, even if they have extraordinary positives.

PAUL SOLMAN: But enough discouragement. The point is, the increase in this category, broadly defined, would add substantially to the official unemployment rate.

Next category: Those who’ve left the workforce to get government disability. Economist David Autor is the expert here.

DAVID AUTOR: Approximately 1 percent of all adults ages 16-64 are applying for disability every year.

PAUL SOLMAN: How do you account for this?

DAVID AUTOR: When jobs disappear; when, you know, opportunities are rare, people look for other means of income replacement. And, you know, once unemployment insurance benefits are exhausted, people need other sources of income, and the disability program is a very attractive program. It’s a, you know, lifetime of — of income replacement, plus medical benefits.

PAUL SOLMAN: Moreover, Autor and fellow researcher Mark Duggan have pointed out, nearly 50 percent of all applicants succeed in getting onto disability, which averages $1,000 a month, and once on, they don’t tend to get off. Parts of Appalachia are known as the disability belt for their concentrations of disability recipients and disability lawyers, whose signs are all over the place. There are broad reasons for the long-term rise in disability. The program’s become much better known; the workforce is getting older.

JAN KODNER, Attorney: Hey, Shelly.

PAUL SOLMAN: And, says disability lawyer Jan Kodner, the focus on corporate profits has changed since the early ’80s.

JAN KODNER: When companies were a little bit more benevolent, they might be more inclined to reward a longtime worker with a made-up job. “Here, take a broom, do what you can, and we’ll keep giving you your paycheck.” I don’t think you’ll see that any more in today’s bottom-line economy.

PAUL SOLMAN: Shelly Waitzman, however, whose fibromyalgia forced her to give up her law practice, rejects the notion that anyone is scamming the system.

SHELLEY WAITZMAN, Disability Insurance Recipient: When you compare the earnings that I had when I was in private practice to what I am receiving now in disability benefits, that to me would be… alone, would be enough to stop someone from thinking that you’re faking. To achieve what?

PAUL SOLMAN: To which one might answer: Achieve some income, plus medical benefits, in a jobless economy. Roughly 5.7 million Americans are now on government-sponsored disability, more than twice the number in the early 1980s. And the rise has tracked the economy’s ups and downs. Last year alone, the job market especially dry, a record 1.7 million Americans applied.

DAVID AUTOR: There’s no reason to think that the amount of… the number of people becoming disabled has risen just because the economy has gone into recession.

PAUL SOLMAN: But even if you think there’s little connection between disability applications and a bad labor market, 2.2 million more Americans are getting disability than in 1982. Like discouraged workers, they’re also out of the workforce. If they weren’t, David Autor thinks disability alone would add considerably to today’s unemployment rate. And then there’s prison.

In 1982, about half-a-million Americans were behind bars. Today, the number is above 2 million. And these people, 90 percent of them men, would otherwise have a huge unemployment rate, says Diane Williams, who runs a Chicago program for ex-offenders.

DIANE WILLIAMS, Safer Foundation: Approximately a third of the people who were incarcerated were in fact working at the time of incarceration. Two-thirds, therefore, were not employed before going into an institution, and obviously are not likely to be employed coming out.

PAUL SOLMAN: Those in the waiting room of the Safer Foundation confirmed the statistic.

PAUL SOLMAN: What percent, do you think, of the people whom you met in prison had been doing legitimate jobs when they were arrested?

RAPHAEL JORDAN: I would… I would have to say maybe 30 percent out of a hundred people had jobs.

PAUL SOLMAN: Now, if some 65-70 percent of prisoners were unemployed as of their arrest, and there are 1.5 million more of them in jail and thus out of the workforce since 1982, well, we’ll spare you the arithmetic and simply say add another 0.5 percent when comparing today’s unemployment rate to the post-depression record.

DIANE WILLIAMS: And if we think about a 66 percent unemployment rate prior to incarceration, you can imagine that once you have the stigma of having been incarcerated, that rate is likely to grow, not diminish. And so absolutely, having been incarcerated has a negative impact on one’s ability to become employed.

PAUL SOLMAN: William Scott served 11 months for burglary in 1995. He’s found jobs since, but has had a hard time keeping them.

WILLIAM SCOTT: After they found out what I was in for, they called me off the job and told me that my services were no needed… no longer needed because of my background, criminal record.

PAUL SOLMAN: If William Scott can’t keep a job, Larry Buchanan can’t find one, after having served 17 years in prison.

LARRY BUCHANAN: I was convicted of murder.

PAUL SOLMAN: Convicted of murder.

LARRY BUCHANAN: Right.

PAUL SOLMAN: Do you have to write “murder” on the job application form?

LARRY BUCHANAN: Yeah. There’s always some kind of way of saying that, “well, we’ll get in touch with you.”

PAUL SOLMAN: “Don’t call us; we’ll call you.”

LARRY BUCHANAN: Right.

PAUL SOLMAN: So not only do the incarcerated make today’s unemployment rate for men seem lower than it should be because so many more of them are behind bars, they may suppress the rate for years to come by becoming disproportionately discouraged workers once they re-enter society. That then ends the list of adjustments.

Add them all up, and today’s 6.4 percent official unemployment rate approaches 1982′s 10.8 percent record, at least for men. There’s one last way to confirm this. Back in 1982, the percent of total working age men not employed for whatever reason — discouraged, disabled, jailed, retired early, or officially out of work — was 17.3 percent. But as of last month, that total was even higher: 17.8 percent not employed, which make the current job bust, at least for men, look far deeper than the official unemployment rate suggests.