Unemployed and uncounted: Out of work and out of hope

Union training center in New York.
(REUTERS/Keith Bedford/Files)

When Daniel McCune graduated from college three years ago, he was optimistic his good grades would earn him a job as an intelligence analyst with the government.

With a Bachelor of Science degree from Liberty University in Virginia, majoring in government service and history, McCune applied for jobs at the National Security Agency, the Federal Bureau of Investigation and other agencies.

But after a long hunt that yielded only two interviews, the 26-year-old threw in the towel last fall, joining millions of frustrated Americans who have given up looking for work.

“There’s nothing out there and there probably won’t be anything for a while,” said McCune, from New Concord, Ohio. He has moved back home to live with his parents, who are helping him pay off his college debt of about $20,000.

“I don’t like it, it’s embarrassing. I don’t want to be a burden to my parents,” said McCune, adding that he felt like a high school dropout.

Economists, analyzing government data, estimate about 4 million fewer people are in the labor force than in December 2007, primarily due to a lack of jobs rather than the normal aging of America’s population. The size of the shift underscores the severity of the jobs crisis.

If all those so-called discouraged jobseekers had remained in the labor force, August’s jobless rate of 8.1 percent would have been 10.5 percent.

The jobs crisis spurred the Federal Reserve last week to launch a new bond-buying program and promise to keep it running until the labor market improves. It also poses a challenge to President Barack Obama’s re-election bid.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one has fallen by an unprecedented 2.5 percentage points since December 2007, slumping to a 31-year low of 63.5 percent.

“We never had a drop like that before in other recessions. The economy is worse off than people realize when people just look at the unemployment rate,” said Keith Hall, senior research fellow at the Mercatus Center at George Mason University in Arlington, Virginia.

The participation rate would be expected to hold pretty much steady if the economy was growing at a normal pace. Only about a third of the drop in the participation rate is believed to be the result of the aging U.S. population.

SLOW PROGRESS

The economy lost 8.7 million jobs in the 2007-09 recession and has so far recouped a little more than half of them.

Economists say jobs growth of around 125,000 per month is normally needed just to hold the jobless rate steady.

Given the likelihood that Americans will flood back into the labor market when the recovery gains traction, a pace twice that strong would be needed over a sustained period to make progress reducing the unemployment rate.

Last month, employers created just 96,000 jobs.

Roslyn Swan lost her job in 2007 as a portfolio associate at a financial firm in New York. After submitting hundreds of applications, the 44-year-old is taking a break.

“Maybe after the elections,” Swan said of her next attempt to get work. “I know that I will be employed again. I don’t know when, but I know it will happen.”

Americans of all ages are leaving the workforce, but the problem is most acute in the 20-24 age group, where the participation rate has plunged by 4.4 percentage points since December 2007.

Many Americans typically start working in their teens, taking part-time jobs after school and over summer vacations, a tradition that is supposed to instill a work ethic. With many failing to secure jobs after graduating from high school and college, analysts worry about U.S. competitiveness.

“Because of delays to their career, the skills set accumulation that normally happens in the first or third job is not happening,” said Paul Conway, president of Generation Opportunity in Washington, a non-profit, non-partisan organization that works with 18- to 29-year-olds on economic issues.

TOUGH ON YOUNG WORKERS

Last month, the proportion of 20- to 24-year-olds in the labor force was its lowest since 1972. Other age categories are faring little better. The 25-54 age group has seen a decline of 1.8 percentage points since December 2007.

Some, like 27-year-old Casey Potts, have gone back to school. She is studying nursing in Kentucky after losing her medical sales job.

“If I had stayed in medical sales, I would be job searching now,” said Potts.

But separate surveys by the Economic Policy Institute (EPI) and Generation Opportunity found little evidence that young people were going back to school when unable to land a job.

One deterrent is the rising cost of education and record levels of student debt. About two-thirds of 2012 college graduates left school in debt, owing on average $28,700 in student loans, according to Mark Kantrowitz, publisher of FinAid.org.

“Young people dropping out of the labor force to go back to school would be a silver lining if it were true,” said Heidi Shierholz, a senior EPI economist, adding that enrollment had gradually been increasing for decades.

A Generation Opportunity survey published in August showed a third of young people were putting off additional training and post-graduate studies because of the sour economy.

“This is significant. People are making the decision to put those off because the assurance of a return to investment is not there,” said the non-profit’s Conway, a veteran observer of the labor market as a former Department of Labor chief of staff.

He said his organization found that young people were doing unpaid internships at nonprofit groups and businesses to prevent their skills from atrophying. Others were joining the military.

Some economists say the participation rate does not paint a true picture because people find work in the informal sector, ranging from legal activities such as child care to crime in some cases.

“People are picking a buck here and there and not being reported in anybody’s payroll,” said Patrick O’Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey.

“They will say they are not doing anything, even as they have a job and are being paid under the table,” said O’Keefe, a former deputy assistant secretary at the Labor Department. “We do not know to what extent that is going on.”

(Additional reporting by Jilian Mincer in New York; writing by Lucia Mutikani; editing by William Schomberg)

Copyright 2012 Thomson Reuters

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9 Responses to "Unemployed and uncounted: Out of work and out of hope"

  1. Bill Cravener  September 24, 2012 at 6:34 am

    Get off your lazy ass and get a job. There are plenty of jobs out there. Go to the ManPower website, they can’t find enough people to fill the growing need.

    Employers struggle to fill jobs:
    http://www.manpowergroup.us/campaigns/talent-shortage-2012/

    • Danny Adams  September 24, 2012 at 7:17 pm

      Don’t tell the folks looking for work that there are jobs out there–convince the employers to hire people who don’t necessarily have college degrees or experience. That’s where a big part of the hiring gap is coming in.

  2. Sandy Price  September 24, 2012 at 9:02 am

    Come on Bill, many bright college grads have gone into great debt to become experts on many things needed in our country. Many corporations are afraid to hire based on the mess we see in the government. Americans are afraid of the November election because few see anything positive with either party.

    I faced a terrible job market when my husband left and gave us no money for the kids or for the house costs. I updated my Personnel records and could not find anything. I had been a tech writer with extensive recommendation and understood how to research just about anything that was needed. I was in my mid 50’s facing thousands of new graduates and I ended up selling children’s clothes. I did costuming for a local Shakespeare group and that brought me into making clothes for commercials. I did both jobs to keep my kids in school.

    That young man who needed work could have flipped hamburgers instead of going to college and will probably have to flip hamburgers anyway. America needs growth in industry making jobs for all qualified and unqualified people.

  3. Laura  September 24, 2012 at 11:25 am

    Bill, are you working? Then shut up. Really. Just shut up. You have NO idea about how difficult it is for us unemployed folks to get a job, especially if we are over a certain age. It’s easier for a criminal to get a job than it is for us unemployed. And yes, I’ve put my application in to all fast food, all temp agencies, retail and the like – and NO CALLS BACK. So until you lose your job and understand how it is out here, then just keep your opinions to yourself.

  4. Pete  September 24, 2012 at 11:51 am

    Jobs can be had, but the wages are falling. When the market presents plenty of people and few jobs, wages fall and people beg for the pittance. Reagan started this slide in wage rates, and it continues to spiral downward. Fewer people working means fewer products selling. Lower wages begets the same, less product moving, less money circulating, fewer people working. Reaganomics is destroying America, while Bush and now Romney have pursued the same course, and more decline will follow. Creating jobs, even if only in building roads, raises the entire economy, because money circulates and the labor building the road buys groceries and shoes.

  5. Almandine  September 24, 2012 at 12:07 pm

    What are they training to be… chaise lounge testers?

    • Griff  September 24, 2012 at 12:27 pm

      The caption does say that it’s a union training center.

      • bryan mcclellan  September 24, 2012 at 9:40 pm

        I’m diggin a hole so the rain runs out and stops my mind from wandering, one shovel full at a time.
        Call the plumber to see who’s backed up.
        We are all qualified, real work is a lost art. Llamraf..

  6. Bill  October 5, 2012 at 7:26 pm

    In many cases, there are jobs unfilled, but not in places people want to live. I live in West Texas, and it’s hot and dry and in the middle of everything – beaches 600 miles, mountains 600 miles, Dallas 350 miles, etc. Lots of jobs and they pay well and have good benefits (when it’s hard to find people, employers tend to pay well), but it’s not NYC or LA or Malibu. Same is true in North Dakota. Lots of people want jobs, but with great pay and close to where they live now, not out in the boonies.

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