 The pain isn't confined to the 14 million officially unemployed
Americans. Among those hurt by today's 9.1 percent jobless rate are
people forced to work only part time and those who've given up
looking for work in frustration.Count many people with jobs, too.
Their pay, home values and employment prospects have been diminished
by the lack of good-paying, full-time work. Include, too,
communities where services have been slashed, small businesses
struggling with weak sales and young adults who can't find jobs to
repay student loans.
The ailing job market is both a symptom and a cause of troubles
elsewhere in the economy -- from a depressed housing market to
cash-short governments to sluggish consumer spending.
Here's a look at the wide-ranging consequences of chronically
weak job growth.
Wages
A crippled labor market shifts bargaining power to employers.
Workers have little leverage to seek raises. When adjusted for
inflation, pay was nearly 2 percent less in August than it was a
year earlier, according to the Labor Department.
"People are much more compliant and willing to take extra work
assignments because they're afraid," says Carl Van Horn of Rutgers
University's Center for Workforce Development.
Government budgets
High unemployment squeezes government finances in at least two
ways. Lost jobs mean governments collect less tax revenue. And they
have to spend more on unemployment benefits, food stamps and other
social programs.
The federal government's tax collections this year are expected
to fall to the lowest level since 1950 as a percentage of the
economy. More than 40 million Americans -- a record 1 in 8 -- are
receiving food stamps.
Enrollment in Social Security's disability program has shot up by
more than 1 million people, or nearly 16 percent, since the
recession struck in 2007. In part, that's because those who can't
find work are seeking government benefits instead.
If the economy were strong enough to reduce unemployment to a
healthy 5.2 percent, next year's federal budget deficit would be
one-third lower than forecast, the Congressional Budget Office said
this week.
Worst off are local governments. They've been cutting services
and jobs for the past two years. Over the past 12 months, localities
have slashed 210,000 jobs.
Young people
Breaking into the job market is increasingly hard for high school
and college graduates. Businesses aren't creating many jobs. And
workers who have jobs are holding on to them. That leaves young
people with few openings to apply for.
To find work, new college graduates have to settle for lower pay
and jobs that don't require a bachelor's degree. That's painful for
those who took on big debts to pay for their college education.
"Young people who enter the labor market under these conditions
pay a wage penalty for quite a long time," says Harry Holzer, former
chief economist at the Labor Department.
College grads hired in 2009 and 2010 earned 10 percent less than
those who found jobs in 2006 and 2007, before the Great Recession,
the Rutgers researchers found.
And economist Lisa Kahn of Yale University found that young
people who graduate in a poor economy will still be saddled with
lower wages 15 years later.
The underemployed and the hopeless
In September, nearly 9.3 million Americans had to settle for
part-time work even though they wanted full-time jobs. That was up
440,000 from August. An additional 2.5 million want to work but have
given up looking. Add those part-timers to the workforce dropouts
and the unemployed, and nearly 26 million, or 16.5 percent, of
working-age Americans want full-time work and can't find it.
[to top of second column] |
 Baby boomers
Aging boomers are less likely to lose their jobs than younger
workers. But when they do, they have a tougher time finding new
ones. Would-be employers tend to choose younger, cheaper applicants.
Some fear that older workers will bolt for a better-paying job once
they can.
In a survey of the unemployed, the Rutgers researchers found that
80 percent of those older than 50 have been out of work for more
than a year. And half have been unemployed at least a year.
Many have drained their retirement savings and lack health
insurance. Nearly half plan to apply for Social Security benefits
earlier than they had intended to.
Peter Cohen, 59, a veteran Hollywood video producer, has been out
of full-time work since October 2008. Cohen, who specialized in
using Apple equipment as a producer since the 1980s, was shocked to
be turned down recently for a retail job at an Apple store.
"The savings account has been depleted, and we are now living out
of our stock market account, which might get us through another
year," Cohen says. "After that, it will be time to hit the 401(k),
which might get us to Social Security."
Small businesses
Unemployment, job insecurity and dwindling wages are preventing
consumers from spending freely. Many big companies can turn to
fast-growing markets overseas to compensate for slumping U.S. sales.
But most small businesses can't.
Small companies surveyed by the National Federation of
Independent Business have cited weak sales, rather than perennial
gripes like high taxes and burdensome regulations, as their No. 1
problem.
Politics
Among those sweating the jobs crisis is President Barack Obama.
He's up for re-election in just over a year. September's 9.1
unemployment rate and tepid job growth suggest he'll be presiding
over an economy so weak it could feel like a recession. No president
since World War II has faced re-election with unemployment this
high.
"Until we see a consistent trend suggesting progress (on the
economy), it's going to remain the dominant issue and a pretty big
negative for Obama," says Andrew Kohut, president of the Pew
Research Center.
Housing
The unemployment crisis is helping depress the housing market.
Many homeowners owe more on their mortgages than their houses are
worth. Others can't afford to sell their homes and trade up to new
ones. And a backlog of foreclosed homes is keeping supplies high and
prices low. Not even record-low mortgage rates have helped.
Analysts say that housing won't recover as long as unemployment
remains stuck at recession levels. Sales won't pick up until
Americans are confident enough in their job prospects -- and have
the wages to support a down payment -- to consider buying a house.
"It used to be that housing led the recovery, and jobs would come
after," says Lisa Ann Sturtevant, a public policy professor at
George Mason University. "It has to go the other way now. The jobs
have to come first."
So far, they aren't coming fast enough to make a difference.
[Associated Press;
By PAUL WISEMAN]
Copyright 2011 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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