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The Nation's Troubled Labor Markets and the Fate of Its Dislocated Workers

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UNEMPLOYMENT
AP

Despite a modest downtick in the aggregate unemployment rate due in part to labor force withdrawals, U.S. labor markets remain in a deep recession. High levels of open unemployment and underemployment and nearly 7 million hidden unemployed dominate the scene. The recent release by the U.S. Bureau of Labor Statistics of its January 2010 dislocated worker survey allowed us to identify the extraordinary impact of record high dislocation of U.S. workers over the 2007-2009 period, predominantly in the private for profit sector.

Between 2007 and 2009, there were 15.43 million U.S. workers who were displaced permanently from their jobs. This was by far the highest number of workers displaced over a three year period in the past 30 years for which we have such data. Nearly 11% of U.S. workers 20 and older were displaced from their jobs, the highest dislocation rate in our post-WWII history. While many key demographic groups experienced double-digit or near double-digit displacement rates, they were highest among younger workers (under 30), men, Blacks and Hispanics, those without post-secondary degrees including persons with 1-3 years of college, construction, manufacturing and mining industry workers, and most blue-collar occupations and lower level service occupations (food prep, janitors, office cleaners). Nearly 1 of every 5 White and Black males under age 35 with no college schooling were displaced, contributing to a depression among our nation's youngest male workers.

Given the sharp increase in the absolute number of dislocated workers over the 2007-2009 period, the steep drop in payroll employment over the same time period, declining job vacancies, and rapidly rising numbers of unemployed workers, the nation's dislocated workers experienced substantial difficulties in finding re-employment by the time of the January 2010 survey. Only 49 of every 100 dislocated workers had found some type of employment, the lowest re-employment raise in the 27 year history of the survey. In February 2000, a decade earlier, nearly 75 per cent of the dislocated had been able to regain employment. The re-employment rates were lowest for the youngest (under 25) and the older dislocated workers (55+), for most blue-collar workers and for office support workers, for Blacks, and for those workers lacking post-secondary degrees. Only 25 to 30 per cent of dislocated Black men without any post-secondary schooling were able to regain employment.

Unemployment problems of these dislocated workers were extremely intense in January 2010. The overall unemployment rate was 43%, the highest ever recorded in the history of the dislocated worker survey dating back to 1984. This unemployment rate was 4 to 5 times higher than the overall unemployment rate for all U.S. workers (9.9%) in that same month. Unemployment rates were highest among men, older workers (55+), Blacks, those with no post-secondary schooling, blue-collar workers, and those laid off from manufacturing, construction, and information services industries. These unemployed workers also were experiencing lengthy spells of unemployment. More than half (55%) of all unemployed, dislocated workers were members of the long-term unemployed, being out-of-work for 6 months or longer, and they contributed in a substantive manner to the record high mean durations of unemployment among all of the unemployed in the nation. Approximately 15% of all of the dislocated were no longer actively looking for work in January 2010 even though 40 per cent of them reported that they wanted to be at work. Hidden unemployment was clearly on the rise, but their earnings losses were still present in their absent paychecks.

Even among those regaining employment, a number of labor market problems existed. These included nearly 300,000 workers who were underemployed, working part-time but desiring full-time work, the rising numbers of mal-employed college educated workers (1 million) who were working in jobs not requiring their college degrees, and the losses in weekly earnings among many of those re-employed. Findings of research on the re-employed by the Heldrich Center on Workforce Development at Rutgers University revealed that many re-employed reported being depressed and anxious in their new positions.

While dislocation problems had reached new peaks in recent years and many of those dislocated continue to experience severe labor market adjustment problems, the U.S. House of Representatives recently passed a budget bill that would eliminate all funding for dislocated worker programs under the existing Workforce Investment Act. While past evaluations of the performance of such programs have admittedly been mixed, this is no time to eliminate efforts to provide re-employment and retraining assistance to the nation's dislocated. The very core of many of our labor market problems is intrinsically bound up with the fate of these dislocated workers. Will either political party have the courage and wisdom to stand up on their behalf?

This blog was co-authored by Andrew Sum and Mykhaylo Trubskyy.