Recession Benefits

Go read David Leonhardt’s economic column in the Times. Basically, the people who still have jobs are getting bigger raises because their companies are making so much money.

One of the distinctive features of the Great Recession has been the enormous number of people who have been out of work for months on end. Almost 45 percent of today’s unemployed workers have been without a job for at least 27 weeks. In no other downturn since World War II did the share exceed 26 percent.

For many of these long-term unemployed, the financial and psychological damage will last for years. For most other workers, however, the situation has had a perverse, and mostly overlooked, silver lining.

Unemployment has been concentrated among a surprisingly small number of people, given how deep the recession has been. The nation’s pool of jobless workers has not been constantly changing. Instead, it’s been relatively stable — mostly because the hiring rate of new workers plunged in 2008 and still has not recovered. The drop in hiring has actually been steeper than the rise in layoffs.

Compare the current slump with that of the early 1980s, which was similar in severity. Over the course of 1980, 18.1 percent of the labor force was unemployed at some point. In 2008, the first year of this slump, only 13.2 percent was, according to the Labor Department’s most up-to-date data. That number surely rose in 2009, but it is unlikely to have come close to the 1982 peak of 22 percent.

If anything, the slowdown of the recovery in the last few months has made the recession even more concentrated. It has put off the day when the job market will be strong enough to re-employ many of the long-term jobless. But inflation has fallen to zero, which helps the purchasing power of everyone fortunate enough to have a job.

Here’s the really interesting part:

The least affected area is a band running from the Dakotas and Minnesota down to Texas and Louisiana. Continuing the concentration theme, this band includes some of the manufacturers and other businesses that have emerged from the recession the quickest.

This pattern probably helps explain why the Senate has taken such a leisurely approach to helping the economy in recent months. Many of the states in the best shape also have small populations and, as a result, outsize political power. In Nebraska, where the unemployment rate is 4.8 percent, there is one United States senator for every 900,000 people. In Florida, where the unemployment rate is 11.4 percent, there is one senator for every nine million people.

Maybe if we lived in those states that keep getting flooded, we’d get more sympathy. Economic tsunami? Ho hum.

5 thoughts on “Recession Benefits

  1. Maybe it’s time for the coasts to say “No” to any aid when there are floods in the middle of the country. Usually I would not agree with that sentiment, but if the unemployed on the coasts are going to be held hostage by the senators from these states, then let them see what it means to go aid-less and have to rebuild with only their own resources.

  2. At my company: 2009: 3 RIFs, 3 months with 2 furlough days (10% loss of pay), no raises, promotions put on hold, insurance rates went up.
    2010: Pittance 2% raise across the board, insurance rates went up (again), some promos permitted (I actually got one I should have gotten 2 years ago, add an additional 3% raise mid-year). Even when you count small raise I got, it hardly makes up for the 10% I lost three months in a row, nor the insurance increase.

    All the while we are being Six Sigma’d to death.

  3. Funny. All the employed folks I hear from are worried about the possibility of wage cuts and layoffs. Is he gathering that wage data from tech corridors and the bailed out banksters and protection rackets?

    Name any time in history that the ‘under’ educated were not employable BECAUSE OF the lack of a degree. I still haven’t found that epoch.

    It was the financial shell games and poor management decisions of the educated that CREATED the slump. The highly educated economists – especially at the Fed – couldn’t see the slump a’comin’. The undereducated will be sweeping up the detritus of this one like they do all the other ones. The lost and wasted lives are never calculated in any balance sheet because economics, like modern war, is fairly bloodless and always ethics-free. The undereducated will be caring for the disabled and the broken in the missions and the streets for thirty years after these wars.

    And they’ll be fixing up the structures and landscapes of all the excess housing that got built because of the decisions of the educated, once demand catches up to oversupply.

    Retraining or training the undereducated WILL put downward wage pressure on those high tech jobs. And eventually, the knowledge to do most of those jobs will be so widely held that those will be considered the stuff of lesser mortals, at which time they’ll be outsourced to other countries where the labor’s even cheaper.

    There is plenty of work that needs doing even now. It’s not getting done because it’s not being funded. You can see it in every town and city, the potholed roads, the overgrown yards of vacant properties, the shuttered businesses down the street from the mega malls where faster money is grown.

    Implicit in analyses like Leonhardt’s is that the undereducated are limited by stupidity or lack of initiative. Yes, he also pointed to the certain problem of Congressional misrepresentation that hampers the intermediate-term fixes government might provide.

    But even there, there’s not a mention of the ethics behind the decisionmaking that both created the lemon and lets the sour linger. The ethics of the educated people with capital. That never gets reported in any bottom line, because pushing the flaws off on the victims grants an excuse so the consciences of the guilty can remain idle.

  4. I can attest to the damage being done over the long haul. Out of work over 8 months now and having been on exactly one interview in that time, I find that I’m applying for all kinds of jobs that I once would have considered entry level. The result is that I now question my abilities. I believe the hype. I must not be qualified after all. I once ran an organization. Now I can’t find a job making the coffee and copies for one.

  5. Don’t surrender to the hype, Lisa. Of course your skills rock like they always have. The main lesson I’ve learned: there is no foolproof career choice. There are both specialists and jacks-of-all-trades experiencing exactly what you’re getting. And the HR folks aren’t necessarily after the ‘best’. They’re often taking the ‘good’ who’ll work much cheaper.

    It’s all about more bodies than jobs. And ignoring the hype, remaining persistent and riding out the storm while putting the creative skills into survival will get you through.

    I bet you and I and Susie could all offer up horror stories of the financial struggles within the past decade. The important thing is we’re all still here and we’re all gonna beat the worst of it.

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