We hit record territory some time ago. No matter how it’s measured, either absolute #’s or as % of labor force or % of population, we (the U.S.) has a level of long-term unemployment far greater than anything we have seen since the Great Depression. see my post To Some, It’s a Depression for the specifics of just how bad. Most economists are expecting this “recovery” to be another long, slow slog, meaning it will be years before we achieve full employment again.
But let’s forget the numbers and GDP for a moment, and consider the individual and social consequences. Don Peck writes in The Atlantic about How a New Jobless Era Will Transform America.
…The worst effects of pervasive joblessness—on family, politics, society—take time to incubate, and they show themselves only slowly. But ultimately, they leave deep marks that endure long after boom times have returned. Some of these marks are just now becoming visible, and even if the economy magically and fully recovers tomorrow, new ones will continue to appear. The longer our economic slump lasts, the deeper they’ll be.
If it persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults—and quite possibly those of the children behind them as well. It will leave an indelible imprint on many blue-collar white men—and on white culture. It could change the nature of modern marriage, and also cripple marriage as an institution in many communities. It may already be plunging many inner cities into a kind of despair and dysfunction not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years…
There’s real health effects. One of the studies cited by Peck, Job Displacement and Mortality: An Analysis using Administrative Data1 by Sullivan and Wachter, shows:
The effect on mortality hazards declines sharply over time, but even 20 years after displacement, we estimate a 10-15% increase in annual death hazards. If such increases were sustained indefinitely, they would imply a loss in life expectancy of 1.0-1.5 years for a worker displaced at age 40.
In other words, long-term unemployment, most of which is not the consequence of individual decisions, is a disease that kills.
In reviewing the Peck article, James Kwak at Baseline Scenario observes:
My initial thought was that the financial crisis and recession might have a salutary effect because the middle class, faced with serious economic insecurity, might start worrying more about economic security (and identifying more with the poor and working class), instead of thinking that individual initiative alone would make them rich. I still think this is possible. Unfortunately, it seems to be unlikely. Peck cites economic historian Benjamin Friedman, who “argues that both inside and outside the U.S., lengthy periods of economic stagnation or decline have almost always left society more mean-spirited and less inclusive, and have usually stopped or reversed the advance of rights and freedoms.” The mechanism for this is simple: although some people may react to economic insecurity by realizing that their interests lie with labor rather than capital, other people will react by blaming their misfortune on immigrants, or minorities, or Jews, or gays, or — this being America — the government.
I am with Kwak on this one. I am very concerned. I see the Washington consensus and the political-media chattering classes, fully secure in 6+ figure income jobs, shifting their attention to “deficits” and “terrorism” and away from the real economic reform and stimulus needed to generate jobs. This is playing with fire. We need genuine investment (large-scale) in public goods & infrastructure: education, research, high-speed rail, highways, universal broadband. We it now.