The unemployment rate has remained mostly stagnant over the past several months, despite job gains below the rate of the expanding population. The employment/population ratio shows far more people out of work than the topline unemployment rate. That’s because of a new phenomenon in our labor markets, where the loss of a job means an increasingly likely scenario of dropping out of the work force permanently. A new paper from Arjun Jayadev and Mike Konczal of the Roosevelt Institute explains:
Starting at the beginning of 2009 it is now more likely that someone who is unemployed will drop out of the labor force than find a job. This is a new problem for our economy, as this hasn’t happened as far back as data can be found (1967). These workers need targeted intervention before they become completely lost to the normal labor market.
The percentage of the underemployed, part-time workers who have the skills to work more, has risen across all sectors of the economy as well. But the numbers on those who have dropped out are almost unbelievable. Statistics show that those not in the labor force have accelerated while the labor force itself, with its constant stream of individuals entering and leaving it, has remained flat.
The non-academic paper version of this story comes today from the New York Times.
Patricia Reid is not in her 70s, an age when many Americans continue to work. She is not even in her 60s. She is just 57.
But four years after losing her job she cannot, in her darkest moments, escape a nagging thought: she may never work again.
College educated, with a degree in business administration, she is experienced, having worked for two decades as an internal auditor and analyst at Boeing before losing that job.
But that does not seem to matter, not for her and not for a growing number of people in their 50s and 60s who desperately want or need to work to pay for retirement and who are starting to worry that they may be discarded from the work force — forever.
This anecdote is consistent with the data, and the unsustainably high number of people who have left the labor force, and not of their own volition.
Remember, this is a time when the cat food commission is considering raising the retirement age and denying full benefits to people until the age of perhaps 70. Yet at the same time, the unemployed from ages 50 and up in particular have the bleakest hope of finding a job in recorded American history, at least going back all the way to the Depression, a time before Social Security. And if people have to wait a decade or more to achieve full benefits, the nest eggs they may have built their entire lives making aren’t likely to stretch, especially because things like the stock market and real estate have become so volatile.
Jayadev and Konczal have a couple blog posts spelling out the key findings of their report. All I have to say is, with this kind of destruction going on in the labor markets, we’re really as a society worried about the anger level of the ultra-rich?