The Hedgehog Review

The Hedgehog Review: Vol. 12, No. 2 (Summer 2010)

Painful Numbers

Joseph E. Davis

Reprinted from The Hedgehog Review 12.2 (Summer 2010). This essay may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission. Please contact The Hedgehog Review for further details.

The Hedgehog Review

The Hedgehog Review: Summer 2010

(Volume 12 | Issue 2)

The recession of recent years has had painful consequences across the globe. In the United States, where it began, some 8 million jobs have disappeared, and countless more have been cut back (in the deep recession of 1980–1981, by contrast, 2.8 million jobs were lost). The unemployment rate, which remained under 5 percent throughout 2007, began to rise in early 2008 and climbed steadily (see Chart 1). In May 2010, the Bureau of Labor Statistics reported the unemployment rate was 9.9 percent.1 Some 15.3 million people were out of work. Of these, 6.7 million, or 46 percent of the total, had been jobless for more than 6 months, a five-fold increase in the number of long-term unemployed since the recession began in late 2007.

But these stark numbers tell only a part of the story of “labor underutilization.” In addition, 9.2 million people were working “part-time for economic reasons,” meaning that they had to settle for part-time work because their hours had been cut back or because they could not find a full-time job. Another 2.4 million persons were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. However, they wanted and were available for work, and had looked for a job in the past year. Half of these people, or 1.2 million, were “discouraged workers,” those who had temporarily stopped looking for work because they did not believe there were any jobs available for them. Adding the number of involuntary part-time workers and those who have temporarily suspended a job search to the number of those “officially unemployed” brings the total labor underutilization rate to 17.1 percent, or nearly 27 million people.2 This rate is nearly double what it was in December 2007.

While most people have felt the effects of the recession, there are acute disparities between people. Among Americans over 25 years old, the unemployment rate for those with a bachelor’s degree or higher is 4.9 percent compared to 14.7 percent for those without a high school diploma.3 Differences in education in part explain racial and ethnic differences but not completely. African Americans, for instance, as reported in the February 2010 Population Bulletin, have higher unemployment rates than other groups at all educational levels. Except for those with the least educational attainment, the same is true for those of Hispanic ethnicity. Men have also been disproportionally affected by the recession.4 Intensifying a decades-long trend, the most severe job losses have come in manufacturing and construction, and in the so-called “middle-skilled” jobs. According to an April 2010 paper by the economist David Autor of MIT,

there was essentially no net change in total employment in both high-skill professional, managerial, and technical occupations and in low-skill service occupations between 2007 and 2009. Conversely, employment fell by 8 percent in white-collar sales, office, and administrative jobs and by 16 percent in blue-collar production, craft, repair, and operative jobs.5

Job and earnings losses during the recession have had many harmful consequences. The ranks of those in poverty, for example, have grown. The most recent statistics are for 2008, and they show the official poverty rate jumping from 12.5 percent in 2007 to 13.2 percent in 2008, an increase of 2.5 million people, and the highest rate since 1997. The only age group not to show a statistically significant increase were people 65 years and over.6 The number of individuals and families receiving food stamp benefits, a better and more direct measure of economic need, has risen sharply. According to numbers compiled by the federal agency that administers the Supplemental Nutrition Assistance Program (formerly the Food Stamp Program), 39.7 million people were receiving food stamp benefits in February 2010. This number represents a 44 percent increase since the recession began in December 2007.7 Similarly, Medicaid enrollment has been accelerating in each six-month period since the recession began. From June 2008 to June 2009, the latest period for which numbers are available, enrollment grew by 7.5 percent or 3.29 million people. According to the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured, this was “the biggest ever one-year increase in terms of absolute numbers.”8 While the bursting of the housing bubble had many adverse effects on homeownership—declining home values, “under water” mortgages (the loan is for more than the house is worth), and a steep rise in foreclosures—the loss of jobs has also contributed to the housing crisis, affecting the ability of people to make monthly payments, refinance, or modify the terms of their loan.

In addition to short-term economic effects on individuals and families, rising unemployment and falling wages are also directly affecting social arrangements, such as mobility and residence patterns, marriage and divorce, and the life of communities, including education and social services. Even with a full recovery, however, the consequences of the recession will endure long into the future. David Autor begins his paper with these cautionary words:

A classic study by economists Lou Jacobson, Robert LaLonde, and Daniel Sullivan found that workers involuntarily displaced by plant downsizings in Pennsylvania during the severe recession of the early 1980s suffered annual earnings losses averaging 25 percent, even six years following displacement. The nonpecuniary consequences of job losses due to the Great Recession may be just as severe. Studying the same group of workers with the benefit of 15 more years of data, labor economists Daniel Sullivan and co-author Till Von Wachter show that involuntary job displacement approximately doubled the short-term mortality rates of those displaced and reduced their life expectancy on average by one to one and a half years.9

A sobering reminder of what is at stake.

Endnotes

  1. Bureau of Labor Statistics, “The Employment Situation—April 2010” (7 May 2010): <http://www.bls.gov/news.release/empsit.nr0.htm>.
  2. Bureau of Labor Statistics, “Table A–15. Alternative Measures of Labor Underutilization” (7 May 2010): <http://www.bls.gov/news.release/empsit.t15.htm>.
  3. Bureau of Labor Statistics, “Employment Situation Summary Table A. Household Data, Seasonally Adjusted” (7 May 2010): <http://www.bls.gov/news.release/empsit.a.htm>.
  4. Linda A. Jacobsen and Mark Mather, “U.S. Economic and Social Trends Since 2000,” Population Bulletin 65.1 (2010): <http://www.prb.org/pdf10/65.1unitedstates.pdf>.
  5. David Autor, “The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings” (Center for American Progress and the Hamilton Project, April 2010): 4, <http://www.americanprogress.org/issues/2010/04/pdf/job_polarization.pdf>.
  6. Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, U.S. Census Bureau, Current Population Reports, P60-236, Income, Poverty, and Health Insurance Coverage in the United States: 2008 (Washington, DC: U.S. Government Printing Office, 2009): <http://www.census.gov/prod/2009pubs/p60-236.pdf>.
  7. U.S. Department of Agriculture, Food and Nutrition Service, Supplemental Nutrition Assistance Program Monthly Data—National Level (3 May 2010): <http://www.fns.usda.gov/pd/34SNAPmonthly.htm>.
  8. Kaiser Family Foundation, “Kaiser Analysis Finds Record Medicaid Enrollment Growth in 2009” (February 2010): <http://www.kff.org/medicaid/kcmu021810nr.cfm>. Kaiser Family Foundation, “Medicaid Enrollment: June 2009 Data Snapshot” (February 2010): <http://www.kff.org/medicaid/8050.cfm>.
  9. Autor 1.

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