TOPICS > Economy

U.S. Jobs Picture Shows Some Promise, but Many in ‘Very Long Struggle’ for Work

December 2, 2011 at 12:00 AM EST
The November unemployment report came out Friday, and it showed new job creation and a surprising drop in unemployment. However, the outlook remains bleak for many job seekers. Jeffrey Brown discusses the latest numbers with Diane Swonk of Mesirow Financial and Carl Van Horn of the Heldrich Center for Workforce Development.
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JEFFREY BROWN: The November jobs report came out today, and it showed new job creation and a surprising drop in unemployment. It also gave President Obama some progress to point to as Congress battled over bills to help those working and those out of work.

PRESIDENT BARACK OBAMA: This morning, we learned that our economy added another 140,000 private sector jobs in November. The unemployment rate went down.

JEFFREY BROWN: At a construction site in Washington this morning, the president was eager to plug the news from the Labor Department.

The economy scored a net gain of 120,000 jobs, combining the 140,000 created in the private sector with the loss of 20,000 government jobs. The increased hiring came mostly in retail and hospitality industries, helped by businesses adding staff for the holidays. That helped push the unemployment rate down to 8.6 percent, the lowest in nearly two-and-a-half years.

Moreover, the number of jobs added in previous months was revised upward for the fourth month in a row. But improvements to the jobless rate were not all due to good news. Today’s data also showed that 300,000 Americans left the work force altogether, and so were no longer counted as unemployed.

Officially, 13.3 million people remained unemployed. And for the thousands lining up at job fairs around the country, the struggle continues.

WOMAN: If you don’t have a job, you don’t eat. So, I mean, I really need this.

JEFFREY BROWN: At the Capitol, Republican House Speaker John Boehner focused on that side of the picture.

REP. JOHN BOEHNER, R-Ohio, speaker of the House: Any job creation is welcome news, but the jobless rate in our country is still unacceptably high.

Today marks the 34th consecutive month of unemployment above 8 percent. And, as you may remember, the Obama administration promised that unemployment wouldn’t exceed 8 percent if we passed their stimulus bill. That promise has gone unfulfilled.

JEFFREY BROWN: In the meantime, Congress continued to wrestle with two key job-related issues. Last night, Senate Democrats and Republicans blocked each other’s proposals for extending the payroll tax cut due to expire Dec. 31.

The president raised the issue today as he and former President Clinton touted plans to create jobs by making buildings more energy-efficient. He insisted Congress act on the payroll tax extension.

BARACK OBAMA: We need to get this done. And I expect that it’s going to get done before Congress leaves. Otherwise Congress may not be leaving and we can all spend Christmas here together.

JEFFREY BROWN: On the Republican side, divisions remain, with many saying the payroll tax cut has run up more debt, but done nothing to create jobs.

At a meeting of House Republicans today, Arizona Congressman Jeff Flake said many rank-and-file members were opposed to an extension.

REP. JEFF FLAKE, R-Ariz.: Most of the people standing up were troubled with moving ahead on this.

JEFFREY BROWN: At the same time, Flake said, there’s fear of a voter backlash if they don’t extend the tax cut.

REP. JEFF FLAKE: People are concerned that our constituents won’t understand this. All they know is that they will get a hit, as I will, as everybody will, if you get rid of this payroll tax holiday.

JEFFREY BROWN: The House and Senate also have to consider extending benefits for the long-term unemployed. They, too, are set to expire at year’s end.

And we look at today’s numbers now with Diane Swonk, chief economist for Mesirow Financial, a financial services firm in Chicago, and Carl Van Horn, founding director of the Heldrich Center for Workforce Development at Rutgers University. Today, the center published its latest survey on how Americans who lost jobs in the recession have been impacted.

So, Diane Swonk, I will start with you.

We have the rate going down for good and some bad reasons. Start with the good news. Where was the hiring coming from?

DIANE SWONK, Mesirow Financial Holdings, Inc.: Well, what we did see is, we did see a lot of hiring, of course, as you already mentioned, in the retail and hospitality sectors.

Unfortunately, that meant the composition of hiring we saw pushed down average hourly wages, because we didn’t see hiring in the high-wage manufacturing, very much of it, and in the construction sectors. Also, we continue to lose jobs in the public sector out there.

It does look like we’re also starting to get new some business formation from some other indicators that we’re seeing and that household survey that shows the unemployment rate. That’s good news.

But, again, you said there was good news and bad news. We lost — a lot of people gave up entirely. And the percent in particular and number of people that are unemployed more than six months remain unchanged. And we held more than 40 percent of those unemployed still are unemployed for more than six months.

There’s a real sort of — there’s real hard time for out there anyone who has been unemployed for a very long time. It tends to be people who have been unemployed for a short time that get re-employed, not those that have been unemployed for six months that need it the most.

JEFFREY BROWN: What do you make, Diane, of the upward revisions? And why does that keep happening, by the way, the month — last bunch of months, where things look better than originally?

DIANE SWONK: Well, the initial payroll data, it’s a survey of established firms, and so it doesn’t get all of the new business creation, and oftentimes it just doesn’t capture that information when we’re at a turning point.

And so that might be encouraging that we have seen consistently upward instead of downward revisions to the data, because it could be that we’re actually capturing more jobs now that are actually being created. That’s the good news. And the key is, is this just catchup to earlier pause in activity related to things like Japan’s earthquake, or is this a real fundamental turn in the economy that is more sustainable going forward?

JEFFREY BROWN: And where do you see — which sectors continue to lag? You talked about some of the ones getting ahead. Where do you still see the problems?

DIANE SWONK: Well, there is a problem. Manufacturing activity is picking up, particularly in the auto sector, although hiring has not picked up very much. It was almost flat. I think 2,000 jobs were created in the month of November.

And that’s despite a major rebound in manufacturing activity in the auto industry. And one of the problems they’re finding is not that there is a shortage of engineers, although that is one of the places there are shortages, but there’s a shortage of skilled workers, people who were machinists, engineers.

And what you would hope in this economy is that some of those people who had been construction workers and maybe had some of these skills can somehow translate those into the places they’re needed now in the economy. There just hasn’t been that apprenticeship kind of thing that we see in Europe to be able to place those kinds of jobs. And many manufacturers are complaining they can’t find workers now.

JEFFREY BROWN: Now, Carl Van Horn, I want to bring you in.

This study that — one of the things you looked at was what happens to people when they do get rehired. Tell us what you found.

CARL VAN HORN, Heldrich Center for Workforce Development, Rutgers University: Well, first of all, we have been interviewing unemployed workers who lost their jobs at the beginning of the recession off and on for the last two years now.

And what we found was that only about 27 percent of them — this is a national survey — had recovered, had gotten a job, a full-time job, when we interviewed them again in September of this year. And of those, about half of them took a pay cut at least of 10 percent, and some of them took a very significant pay cut. Another third of them told us that they had to change their careers entirely in order to get another job.

JEFFREY BROWN: So when they come back in and take a lower wage, that reflects very clearly a very competitive atmosphere that they’re trying to get into.

CARL VAN HORN: Yes, there’s a very large number of applicants for every job. Obviously, there are some, like Diane mentioned, that are highly skilled jobs that go unfilled.

But, by and large, that’s not the case, where we find people telling us that they just can’t find work, despite their best efforts to continue to look and try hard to find another job.

I think the other point to make is that they told us only about one in — 14 percent had actually gotten a skills training program to help them change careers. So what that means is most of them either weren’t able to find such a program or couldn’t afford it.

DIANE SWONK: Right.

CARL VAN HORN: And, therefore, they’re stuck in the same place they were before.

JEFFREY BROWN: And what kinds of things are — what’s the attitudes they’re telling you about that time spent looking for work? Are they still out there fighting for work? I’m trying to fit this into the numbers we’re hearing about people just dropping out altogether.

CARL VAN HORN: A small percentage drop out entirely. About 6 percent quit the work force, most of them taking early retirement, if they were eligible, some of them just simply giving up.

Most of them stay in the labor market. And we asked them about what they’re doing to look for work. And they’re doing all the things you would expect them to do. They’re searching the Internet. They’re contacting former employers and friends and so on.

But they’re unsuccessful. I mean, in terms of the unemployed, I think it’s important to reinforce the point that, of those we first interviewed two years ago who are still unemployed, that 50 percent, therefore, are unemployed for more than two years.

DIANE SWONK: Yes.

CARL VAN HORN: So they have lost their unemployment insurance benefits, if they had any. And so it’s a very, very long struggle.

And what we find is that they are changing their lifestyles entirely. They’re not only giving up on things they’d like to have, but they’re giving up on things they need to have. They’re selling possessions. They’re borrowing money. They are forgoing visits to the doctor, and all the kinds of things that make life unpleasant in a continued state of unemployment.

JEFFREY BROWN: Diane Swonk, you wanted to jump in there?

DIANE SWONK: Yes, I wanted to add, I mean, that is really reflected in the poverty statistic as well. We have more than one in five children in this country now living below the poverty line, which is already a pretty low threshold.

Almost a third of those children are in the state of Florida alone, where the construction bust was so horrendous, and you have a lot of them homeless. And that’s a really tragic reality of today is how many people are not only doing that, but then young people coming back either from college or they didn’t have a college degree, they’re 25 years old, they’re moving back in with their families and they’re adding financial stress on to a family that is already stressed.

You may have more than one person in a house that has lost a job for a long period of time and fewer, and fewer wage earners being able to support that household. And that’s what we’re is people — even on Black Friday, some of the surveys of people that were standing in those lines, they were standing in line because they had waited all year to be able to buy the one thing that they needed to replace during the Black Friday sales, and they could only afford it during those sales.

JEFFREY BROWN: So, Carl Van Horn, when you look at numbers like today, and you match it up against your survey, we keep hearing today a sort of glass half-full, half-empty. What do you look at? What do you see?

CARL VAN HORN: Well, I think what our data show is really a moving picture of an evolving crisis.

These are the folks that were at the forefront of the economic recession. They lost their jobs at that point. And, as evidenced by our study, most of them have not recovered. And one of the things we try to do is look at that and figure out what percentage of them are actually recovered.

And we only found about 7 percent had fully recovered in the sense that they’re — they had only taken a temporary cut in pay. They were back working again. But we found another 30 percent who really are what we call devastated. That is to say, they have a significant loss of incomes, changing of standard of living, and they really believe that it’s a permanent change in their life.

And, as we said before, they’re headed on their way, if they’re not already, in poverty. They are drawing on food stamps and other social services that they have never used before. So, what it tells us is that there’s this huge problem, again, millions of people who have been unemployed for a very long period of time.

And the further along it goes from their last unemployment, the harder it is for them to get back in the labor market.

JEFFREY BROWN: All right, Carl Van Horn and Diane Swonk, thank you both very much.

DIANE SWONK: Thank you.