> ______________________________________________ > From: Cordell, Arthur: ECOM > Sent: Monday, February 4, 2008 11:51 AM > To: futurework > Subject: job market is even worse than you think > > Why job market is even worse than you think > Nation's first job loss in more than four years tells only part of the > story of the weak labor market. The ranks of the long-term unemployed > are growing. > By Chris Isidore, CNNMoney.com senior writer > http://money.cnn.com/2008/02/01/news/economy/longterm_unemployment/ind > ex.htm?section=money_mostpopular > February 2 2008: 9:05 AM EST > NEW YORK (CNNMoney.com) -- A government report on January jobs showing > that employers trimmed payrolls for the first time in four years set > off alarm bells. > But the report, which was released Friday, tells only part of the > story about the underlying weakness in the labor market. > The number of Americans out of work for at least six months is rising > - reaching levels more typically seen deep into a recession or period > of job contraction, not at the beginning. > And while some economists believe that the drop in jobs reported in > January might later be revised away to show a narrow gain, it's clear > that the rise in long-term unemployment is a far more established > trend and one economists say isn't going away anytime soon. > Harder to find a new job. The number of long-term unemployed stood at > a seasonally-adjusted 1.4 million in January, up about 21% from > year-earlier levels and up 3% from the previous month. The full-year > average for 2007 was 1.2 million long-term unemployed, nearly double > the reading for 2000 - just before the last recession. > For all of 2007, about 17.6% of those who were unemployed had been out > of work six months or more. That compares to only 11.4% who were > long-term unemployed in 2000. > And while the unemployment rate dropped to 4.9% in January from 5% in > December, the latest reading showed 18.3% of the unemployed have now > been out of work for at least six months. > "You have to understand that 5% unemployment today is worse than 5% > unemployment 10-15 years ago," said Jason Furman, senior fellow, > Brookings Institution. > Furman and others say long-term unemployment is not just a problem for > those struggling to find jobs. It poses a risk for the economy as a > whole and cuts into household earnings and economic output. > If 5% of the labor force is unemployed for a short time as they switch > jobs, they could keep spending, drawing on a combination of government > assistance and personal savings. > But those who are unemployed more than six months lose unemployment > insurance benefits and are more likely to deplete savings to the point > where they are forced to cut back on spending. > They also will be far more likely to accept jobs at lower pay than > their previous positions, which puts downward pressure on wages. > "We are looking at a labor market already that is weak and set to get > a lot weaker," said Dean Baker, co-director of the Center for Economic > and Policy Research. > Job seeker surprised by difficulty. Les Tarlton had worked in the > telecom industry for eight years when the company he was working for > shut its operations near his suburban Dallas home in January 2003. > "I thought surely I can go out and get a job," he said. "I had a good > reputation in the company. I had survived a lot of earlier layoffs. It > wasn't like I lost my job because of anything I did." > But five years later he has yet to find a permanent job to replace the > one he had doing business performance analysis. He's had a variety of > short-term contract positions, but nothing long-term. > "Part of it is my age," said Tarlton, 54. "They can hire a person > straight out of college for a lot less money. And while I have skills > in business and finance, my college degrees in are in Christianity and > psychology, my master's is in theology. That doesn't help." > Tarlton is now home schooling his six-year old and taking care of his > other four children while his wife works. But the total household > income is a fraction of what it used to be. While he still sends out > about five resumes a week, he said he essentially gave up hopes of a > new job about two years ago. > "We've burned through all of our retirement trying to survive," he > said. > Problem could get worse As the stimulus package makes its way through > the Senate, there have been pushes to extend unemployment benefits > beyond six months. > Even if it's not included in this bill, House Speaker Nancy Pelosi > said she would support separate legislation to address the growing > problem. > "While it might have been premature to extend benefits in the past at > this level of unemployment, today it could be overdue," said Furman. > If the economy does enter a recession, the problem of long-term > unemployment could reach levels not seen since the early 1980's, > according to Baker. > A report from the Congressional Budget Office last October confirmed > that the long-term unemployment problem is a growing one, suggesting > there could be a fundamental shift in the labor markets. > "People are less likely to become unemployed than in the past, but > those who do become unemployed are more likely to remain unemployed > for more than half a year," said the October 2007 report. > Older work force playing a role The CBO report didn't have any easy > answers for this trend. But it suggested that the aging of the work > force might be a major contributing factor. > Baker agrees that the demographic shift is probably part of the > problem. > "Someone well into their forties who loses their job at their peak > earning potential, they might be expecting a higher pay than someone > in their twenties," Baker said. "Even if they're willing to take a > lower paying job, the employer might decide not to offer it to them > because they'll fear the older worker won't be loyal." > The CBO report added that some firms are using temporary layoffs less > frequently than in the past. When someone loses a job today, it's > likely a permanent separation. > Employers and workers getting more picky Officials in job outplacement > firms, hired by firms to work with employees who have lost their jobs, > say they're seeing some increase in the time it takes to find new > positions even for those generally better educated workers with whom > they work. > Cory Holbrough, senior vice president of Lee Hecht Harrison, said that > employers for skilled positions are becoming more selective about new > hires than they used to be. > "In the past they might have hired the best person who had eight or > nine of the ten skill sets they were looking for," he said. "Now they > are saying, 'We want all ten skill sets.'" > ==================
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