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Long-Term Unemployed Losing Hold On Middle Class


First Posted: 08/31/11 08:51 AM ET Updated: 10/31/11 06:12 AM ET

If anyone in America could plausibly claim immunity to the unemployment crisis, Joe Sangataldo figured to be the guy. He earned his wages at a county social services center in southern New Jersey, where he helped jobless welfare recipients try to find work. In a nation beset by relentless decline, here was a rare growth industry, one with staying power.

But last fall, confronted with what it portrayed as an otherwise-unbridgeable budget gap, Cumberland County laid off Sangataldo along with six of his co-workers. A career civil servant with a college degree, he suddenly found himself part of the very mass of people he had previously been paid to assist.

"I went from serving the people affected by the recession to being part of the recession," Sangataldo said. "I had to sit there and tell these people, "Well, I won't be here next week. They’re laying people off.' And they're like, 'Well, if they're laying you off, where's the hope for me?'"

Among economists and policymakers, the conversation with greatest currency today centers on fears of a double-dip recession -- whether we are in one, or on the verge. Two years after the official end of the downturn known as the Great Recession, economic growth is again weak, housing prices are still falling and manufacturing is retrenching. But among people like Sangataldo -- the 6.2 million million Americans who have been officially without work for six months and longer -- such talk sounds like an esoteric exercise, one with little connection to daily life.

In many such households, the conversation has changed little in recent years, centering on more basic questions: How do you pay bills without a paycheck? When does unemployment insurance run out? How many rejections can you endure on a job search before you give up?

"In my south Jersey experience," Sangataldo said, "it's been a recession forever."

That perspective speaks to what may be the greatest loss imposed by the recent years of economic downturn in the United States -- as paychecks have been traded for unemployment checks, homeownership has yielded foreclosure and upward mobility has given way to a resigned struggle to avoid slipping into poverty -- a loss of faith in the durability of American middle class life.

"American workers share a grim outlook on the future of the U.S. economy, regardless of their employment status, age or income level," concluded a survey of more than 800 workers interviewed last year by the John J. Heldrich Center for Workforce Development at Rutgers University. Some 56 percent of those surveyed said the economy had "undergone a fundamental and lasting change," according to the survey.

In the months since that survey, sources of gloom have only been amplified. A widely-watched gauge of consumer confidence this week dropped to its lowest level since the spring of 2009, when the economy was gripped by recession using any conventional definition.

In the immediate term, economists are focused on this Friday, when the latest monthly snapshot of the nation's job market will be released by the Labor Department, adding data to the debate over whether the unemployment rate -- 9.1 percent as of July -- is on its way down or, as many economists fear, could remain elevated for months or even years.

But whatever the data reveals -- whether the Labor Department counts a surprisingly large number of jobs or affirms a largely dismal picture seen in recent months -- economists are anticipating no alteration to the deeper trends in the American economy: a long-term stagnation of wages and a rapid erosion of working opportunities.

As recently as the middle of 2007, 63 percent of the working age population was employed, according to Labor Department data. As of July, that percentage had sunk to 58.1 percent. That swing -- a drop of nearly five percentage points in the so-called employment-to-population ratio over the course of about four years -- is the steepest such decline since the government began keeping track in 1948.

The only period that comes close was between early 1980 and late 1983, when the employment-to-population ratio fell by nearly three points, from 60 percent to about 57 percent. But that era, which featured a double-dip recession, coincided with the Federal Reserve's decision to lift interest rates sharply to choke off inflation, a step that crimps economic activity. Two years later, in early 1985, employment was back to 60 percent.

This time, the Fed has interest rates at near zero in an aggressive bid to catalyze economic growth, and still hiring is lean. Many economists view this as a deeply entrenched dynamic. Employers are reluctant to add payroll costs, cognizant that many consumers are too anxious and indebted to spend, thereby depriving the economy of the wages that might break the cycle. The result is a self-perpetuating cycle of diminishing fortunes.

Sangataldo, 53, stands as a reluctant representative of this trend.

The son of union workers, his father was a World War II veteran who painted traffic markers on streets for the city of Vineland, N.J., and his mother sewed clothing. They never made much money in his memory -- "We were nothing like the doctors' kids," he said -- but neither did they lack the basic pieces of middle class life.

"We had everything," Sangataldo said, recalling vacations to the Poconos and the Jersey Shore with his two brothers. His parents paid off the mortgage on the sprawling ranch house they bought with the savings from their jobs, and they always had two cars in their driveway. When Sangataldo graduated from high school in 1976, his father handed him the keys to his old Chevy sedan.

Neither of his parents made it past the eighth grade, Sangataldo said, but he secured Pell Grants to complete his studies in human resources at nearby Rowan University. He used that degree as a launching pad for a career helping welfare recipients and people with disabilities enter the workforce.

His earnings were always modest, beginning at $10 an hour as a trainee, climbing to $13 an hour as an employment director at a job training agency in Camden, and then to $14 an hour at a similar position in Philadelphia. His last job, with Cumberland County, paid about $19 an hour, he said.

His sense of confidence in the stability of that job stemmed directly from the instability that defined the lives of the clients coming to see him in droves. Before he was laid off, he was responsible for 300 case files -- mostly single people drawing $140 a month in welfare benefits, plus food stamps. They were required to see him to keep their cash assistance flowing.

They entered a lobby in a county one-stop center, stepping into a crush of people lined up to apply for unemployment insurance. They took a seat at his grey cubicle, described their latest job applications and complained about the infrequency of their interviews. He advised them on how to proceed, directing some to complete GED programs; arranging for others to train to become truck drivers or nurse's aides. He knew that most would be lucky to even secure jobs at big box retailers that paid so little -- the minimum wage of $7.25 an hour -- that they would likely qualify for food stamps.

"I'd be honest and tell people the odds were not good, but if you give up and stop looking, you get nothing," Sangataldo said. "They need a base of support to keep their enthusiasm up. If people become complacent, it's even worse. They just crawl up in a hole and die."

What he did not realize was that soon he would enter that crush of people lining up for unemployment insurance. He would need words of encouragement to avoid succumbing to despair.

In the year since he lost his job, Sangataldo has applied for 20 or so government jobs in his field, without landing one. He has applied for two dozen jobs in whatever seems likely to generate a paycheck -- part-time work at a restaurant, manager positions at the International House of Pancakes and jobs at Denny's. On the rare occasion that he hears back at all, the message buried in the pro forma rejections seems clear, he said.

"I make too much," he said. "I'm too old. They want someone young, dumb and willing to work for nothing. I can't lie about having a bachelor's degree."

In surrounding Cumberland County, the unemployment rate now reaches 13.5 percent -- the sort of fact that can sap a person's desire to go out and look.

"I don't know where there's an economy that can support me," he said. "I don't buy any gas. I don't go anywhere."

Sangataldo lives with his mother and his brother, in the same house where he was reared. His mother is 91 now and suffering from kidney problems. He wonders what will happen if, as seems likely, she needs to be transferred to a nursing home. He is not sure how he will hang on to the house with only his unemployment check and his brother's wages from a restaurant job -- the job he took after being laid off as a car salesman.

Sangataldo's life now amounts to a crash course in a contemporary version of home economics: how to sustain yourself on a $407 per week unemployment check in place of a $600 paycheck. How to rely on coupons and the bargain bin of the local grocery store.

He imagines the consequences if his unemployment check runs out at the end the of year -- the outcome unless Congress extends emergency benefits -- and he is not sure how he will respond.

These are the thoughts never far from his mind as he sits in the house his parents bought through a lifetime of work and contemplates what his own life will be without the chance to work. He watches the news obsessively, absorbing talk of the debt crisis and elections.

He hears about the latest cuts to state and city budgets and he struggles to find the logic. So many people need help, and helping people is what he does, yet the system would rather hand him an unemployment check and have him stay home, where he can help no one -- not even himself -- rather than give him a paycheck and let him try to put people on the path to better days.

"I should be working on the solution to this," he said. "It's very frustrating."

And lately he hears the press chattering incessantly about the jobs program supposedly emanating from Washington, words that seem woefully late, he said.

"What do you do with all these people around here?" he asked. "Six months from now, they are going to be living in tents. And talking is nothing. Sooner or later, you're going to need some action."

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