October 17, 2012
Vol: 19 No: 42


Our hidden unemployed: too discouraged to count

via: street-papers.org / Reuters

REUTERS/Lucas Jackson

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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.

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

In September, 2.5 million people who had looked for a job sometime in the prior 12 months were not in the labor force, despite wanting work and being available for it. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.

“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.

Slow progress

Total employment rose by 873,000 in September, following three months of little change, according to the Bureau of Labor Statistics. The number of long-term unemployed, categorized as those jobless for

27 weeks or more, was little changed at 4.8 million and accounted for

40.1 percent of the unemployed.

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 vacation, a tradition that is supposed to instill a work ethic. With many failing to secure a job 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 Virginia, a nonprofit, nonpartisan organization that works with 18- to 29-year-olds on economic issues.

No return on investment

In September, among those “marginally attached” to the labor force, there were 802,000 discouraged workers, people who are not looking for a job because they believe no jobs are available to them. 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 Potts’ example is not indicative of a trend. 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.

“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.

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.

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 nonprofit’s Conway, who, as a former Department of Labor chief of staff, is a veteran observer of the labor market.

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 rate of participation in the workforce 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.”



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