Long-term joblessness reaches middle class
WASHINGTON — An unusually large share of workers have been out a job for more than six months even as overall unemployment has remained low, a little-noted weakness in the labor market that analysts said threatens to intensify the impact of the unfolding economic downturn.
In November, nearly 1.4 million people — almost one in five of those unemployed — had been jobless for at least 27 weeks, the juncture when unemployment insurance benefits end for most recipients. That is about twice the level of long-term unemployment before the 2001 recession.
The problem is ensnaring a broader swath of workers than before. Once concentrated among manufacturing workers and those with little work history, education or skills, long-term unemployment is growing most rapidly among white-collar and college-educated workers with long work experience, studies have found, making the problem difficult for policymakers to address even as it grows more urgent.
"What has happened is a polarization of the labor market. It was very strong at the very top and very strong until recently at the bottom," said Lawrence Katz, a labor economist at Harvard University. "But in the recent weak recovery, and now recession, demand has been very weak" for jobs in the middle.
Caroline Dixon never contemplated any of that when she resigned in April after nine months as a program officer with the Spina Bifida Association. She left because the job was "a bad fit," and she said she was confident that the economy was strong and she would soon find work. For a long time, she never stopped in the unemployment office near her Washington home.
But as weeks out of work stretched into months, Dixon, 41, became a fixture there. Now she can be found there on weekdays, spending untold hours at the heavily used computer bank checking out potential employers, printing job notices and e-mailing her resume. "I jokingly tell people that I'm headed to my office when I'm coming here," she said, without a smile.
With the economy sliding toward a possible recession and the jobless rate having spiked to 5 percent last month, the already high rate of long-term unemployment is likely to grow, as it has during past slowdowns, a prospect that has spawned calls in Congress and on the presidential campaign trail to extend unemployment benefits and expand tax cuts to protect jobs and fuel the economy.
The growth in long-term unemployment has occurred even as displaced workers have taken bigger pay cuts to re-enter the job market. A 2004 study found that workers who lost a job in 2001 to 2003 took an average pay cut of 17 percent in their new jobs, more than double the average cut of those displaced in the late 1990s.
"When people are losing good jobs these days, they have a very hard time getting back to the type of job they had before," said Andrew Stettner, deputy director of the National Employment Law Project, an advocacy group that presses for more-generous unemployment benefits.
While strong corporate profits, low inflation and record manufacturing output characterized the extended recovery that followed the 2001 recession, some economists call that period of expansion a "CEO's recovery." Real wages were mostly flat, poverty ticked upward and an unusual number of people had a hard time finding work — a fact masked by relatively low overall unemployment rates.
"This tells you that this has not been as good as economy as the overall unemployment rate would make it seem," said John Schmitt, a senior economist at the Center for Economic and Policy Research.
"This dynamic causes anxiety among people even if they still have a job. It is very important to understanding the level of anxiety that the work force feels as a whole."
Dixon estimates that she has sent out more than 100 resumes, yielding only four interviews. And nobody is talking about paying her anything near the $65,000 she made in her last job. "All of my friends keep telling me, 'You'll get a job,' " Dixon said. "But that's what I thought six months ago, and I still don't have one."
Dixon said she and her friends and family grow more anxious the longer she is out of work. For virtually all of her life, having a job was a given: Her late father had worked 35 years for Washington Gas; her mother retired from her last job after more than 15 years. After graduating from college in 1989, Dixon spent 16 years working for the American Forest Foundation before moving to the Spina Bifida Association in the District of Columbia.
These days, her mother often sends Dixon encouraging notes with Safeway gift cards tucked inside. "I'm sure she's concerned," Dixon said. "She's always asking, 'So, how's the job hunt going?' I tell her, 'If I had a job, you'd be one of the first people I'd tell.' "
Dixon has managed to stay afloat by occasionally working as a substitute teacher at the Washington Middle School for Girls, using a small profit she earns from a rental property and tapping into her savings. She said she considers herself lucky to get free health insurance through a D.C. program that provides coverage for the unemployed.
Still, things are getting tight for Dixon, who is single and has no children. "I need a safety net under my safety net," she said.
Officials who work with the jobless said they are seeing more people like Dixon — educated, with stable work histories — having a hard time finding a job.
"It seems like for the skilled worker who has experience and credentials finding a job that matches their skill and experience is like reaching for the brass ring on the carousel," said Howard Marshall, manager of the Baltimore County Workforce Development Center in Maryland. "A lot of people are grabbing for it, and only few will get it."
Jan Saurbaugh, 57, a former computer specialist who lives in Timonium, Md., started working at 14, when he got a paper route. By 19, he had joined the Marines. For most of his life, he has worked steadily, shifting with life's circumstances and the economic currents.
After leaving the military, he trained and worked as a welder. When neck injuries from an auto accident left him unable to do that, he went to community college to learn computer-assisted drafting, which led to seven years of work with the Coast Guard in Baltimore. Saurbaugh, who exudes an old-school formality with his ramrod-straight posture, tightly knotted necktie and neatly pressed corduroys, said he made the mistake of his career when he left his drafting job for a computer-related Coast Guard job in Washington. The position was officially designated as temporary but offered an immediate $12,000-a-year increase over his $38,000 salary and the promise of more raises.
"One guy told me, 'I've been on temporary status with the federal government 13 years, and I've always had a job,' " Saurbaugh said, which put his misgivings to rest. But then Saurbaugh faced what he called a "bad turn of events."
Scrambling to complete his bachelor's degree, Saurbaugh found himself getting little sleep and struggling with the commute to Washington. He developed a sleep disorder that caused him to miss significant time at work. Nine months after taking the job, he resigned under pressure. A sheaf of commendations and awards he had accumulated with the Coast Guard could not save his job.
"I was devastated that I didn't have work," Saurbaugh said. "But I figured I was just a couple of months away from my degree. I figured once I had it, somebody would pick me up."
That was more than two years ago. In between, he has worked only three months — at a car dealership where a childhood friend is a manager. "I sold eight cars a month for three months. That wasn't cutting it. I am just not a car salesman," he said.
Saurbaugh, whose wife is partially disabled, has sold his camper and drained his retirement accounts and is now dependent on family for survival. His elderly in-laws took a home-equity loan to pay the mortgage on his three-bedroom Cape Cod, and his brother-in-law pays for the couple's health insurance. "I thought by this time in my life, I'd be the one peeling off a few bills for someone," he said. "I hate asking people for money."
He said that if he doesn't find work soon, he will have to sell his house. Saurbaugh said he has looked for jobs everywhere, even applying at electronics stores and bulk-office-supply businesses. But, so far, nothing.
"I keep telling my wife: 'Things are going to work out. They'll work out," he said, shaking his head. "But they haven't."