With all the sturm und drang in recent weeks over raising the debt ceiling -- and with the mediocre agreement now reached between the administration and Congress which irresponsibly only cuts without responsibly raising any new revenues -- it's more than clear that we've lost sight of the greatest economic challenge now facing our country, which is the legions of unemployed workers.
With all deference to Shakespeare, "frailty" is not "woman" as Hamlet pronounced. Rather, "frailty" is the 29.1 million real unemployed workers in this country and their fragile -- and, for millions of them, almost hopeless -- prospects for gainful re-employment. A frailty that has been wrought by thirty years of unfair "trickle down" economics, a dozen years of unrestrained greed by our major financial institutions, and the political evolution of the most anti-jobs, anti-manufacturing, unfair trade economic construct imaginable.
It's one thing to have put our workers in this tragic fix. And in it they are. It's entirely another thing for vast numbers of them to have little opportunity of ever finding a way out.
Every month since late 2006, we've been tracking for Members of Congress and others, on the same day that BLS puts out its "official" unemployment numbers, the real unemployment figures. In July 2011 the official BLS unemployment rate was 9.1% covering 13.9 million workers. In real terms, however, there were actually 29.1 million workers unemployed and the overall rate was a staggering 18.2%, and just since the Inauguration 4.6 million more workers have entered the ranks of the real unemployed.
Every month since 1947 (!!), the Bureau of Labor Statistics consistently fails to include in its "official" unemployment numbers workers who are "part-time-of-necessity" (i.e., the 'underemployed') because their hours have been cut back or they are unable to find a full-time job (now a staggering 8.4 mm workers); who are "marginally attached" to the labor force because while wanting a job, they have not searched for one in the past four weeks because of availability, skill or personal reasons (now 2.8 mm workers); or who have removed themselves from the labor force although they "currently want a job" (now 4.0 mm workers).
Officially, the average number of weeks unemployed is 40.4 and the number of workers unemployed a half year or longer is 6.2 million. The reality is that 30% of the real unemployed -- or 8.7 million workers -- have actually now been out of work for more than a year. When considered together, this means that the number of workers unemployed a half year or longer must be at least 10 million and perhaps as many as 13 million. And unless job creation becomes the central focus of the Obama administration and all of government over the next 18 months, this terrible unemployment situation is only likely to get worse as the economy continues to grow at rates far below what is needed to find jobs for new eligible workers.
Instead of a reported meager 1.9% increase in GDP in the first quarter, actual growth was only a negligible 0.4%, and in the second quarter it was just 1.3% (versus a forecasted 1.8%), all when we need annual GDP growth of 3.5% or so just to tread our economic water.
The economic outlook is daunting enough if you are one of these 29 million Americans who want a job. But as they look for work in a barren job market, hopelessness comes flooding in for a majority of them as they encounter insidious and increasingly pervasive forms of discrimination which will effectively end their working lives.
In a compelling article, Catherine Rampell of the New York Times identified in depth the pernicious practice that many employers have adopted of "consider[ing] (or at least 'strongly prefer[ring]') only people currently employed or just recently laid off." She went on to note that "legal experts say the practice probably does not violate discrimination laws because unemployment is not a protected status, like age or race."
Yet while "age" does indeed have protected status, let me tell you as a long-time corporate CEO that although most CEOs do not discriminate against their existing employees because of age except perhaps when it comes to late-career promotions, all too often their human resources and personnel departments do almost everything they can to avoid hiring as new employees people over the age of, say, 50.
And then there are those unemployed workers who are finding that they are not too old, but rather too young or inexperienced. Right now, we have 5 million out-of-school unemployed youth -- half with a B.A. or a B.S. and half with a high school diploma -- for whom age as a protected status only barely applies. Their problem in this anemic economic recovery is compounded by the fact that every June -- year after year -- another 6.5 million or so young people graduate from high school and college. When the jobs-applicant pipeline for youth keeps filling up each year to such a degree, each year, anyone still stuck in the pipeline from prior years gets overwhelmed.
One powerful solution to the current youth unemployment problem -- and there are several (see again "A Vision for Economic Renewal") -- would be simply to expand the existing Work Opportunity Tax Credit (WOTC) and extend it beyond August 2011. This law provides small businesses with tax incentives to hire people who might ordinarily struggle to find work - for example, those with lesser skills, veterans and, since 2009, 'disconnected youth'.
As if length of unemployment, age, and youth weren't barriers enough to getting re-hired, however, there is also increasingly the issue of one's credit. The evidence is clear that more and more employers are now considering credit reports in making new hiring decisions. Sixty percent of employers now do credit checks on job applicants -- according to the New York Times , this figure is up from less than 20% in the mid-1990s.
It's an easy assumption that most of the 10 to 13 million long-term unemployed workers and many of the other 16 to 19 million unemployed Americans have had their prior good credit ratings damaged, and thus they must preponderantly be among the 45 million Americans who are living today with "damaged credit". And once an unemployed worker's credit rating is downgraded, then he or she is not hired by company after company that uses credit records to screen job applicants. This despite the fact that five states limit the use of credit histories by potential employers and 20 or so are considering similar measures.
Employers generally must obtain one's permission to check credit. But can you imagine any unemployed individual saying "no" to that request? Even if the prospective employer doesn't acknowledge it, as the Times also wrote back in October, "If an employer rejects a person for a job, who's to say it wasn't actually because of the credit report?"
The esteemed Martin Feldstein, former Chair of the Council of Economic Advisors under President Reagan, wrote in an op-ed on July 25 that "it's jobs that will define Obama's future" -- and indeed they will. In fact, White House adviser David Plouffe couldn't be more wrong when he said in early July: "The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers. People won't vote based on the unemployment rate, they're going to vote based on: 'How do I feel about my own situation?"
In the vein of Mr. Feldstein's comment, greatly affecting Mr. Obama's future will be whether or not his administration couples specific jobs-creation initiatives (see "A Vision for Economic Renewal -- An American Jobs Agenda") with all-out efforts to outlaw discrimination in hiring decisions on the basis of duration of unemployment, older age, youthfulness and credit rating.
The president should use his bully pulpit to call out these forms of discrimination against workers and express his outrage. Then he should immediately exhort Congress to legislate new and more exhaustive protections, to include more accessible complaint processes, easier class-action status and far stiffer penalties with expedited reviews.
So, as we sit in the worst economic travail since the Great Depression, mired as we are in an unprecedented jobless recovery, I grieve for the man or woman who has been out of work for more than a few months, or who is older, or who is just out of school, or who has seen the consequence of having no paychecks come to life in a deteriorating credit report.
The increasingly frail legions of unemployed Americans desperately need the swords and the shields of all those who were elected on the promise of defending workers and fighting for the unemployed. Without the leadership of the president and some pointed legislation from Congress, there is little prospect that the long-term real unemployed are going to be hired into the recovery, whenever it might come, and no hope that this job-less recovery is going to become job-full any time soon.
Leo Hindery Jr. is chair of the Smart Globalization Initiative at the New America Foundation and an investor in media companies. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media.
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