Lost in the Jobs Numbers
Good news for the Obama White House yesterday as the July jobs report turned out better than expected: the number of jobs lost was less than 250,000, and the unemployment rate actually fell one-tenth of a point. Now, anybody who knows how that measure is calculated understands that reason was fewer people even bothering to look for work--discouraged jobseekers aren't counted in the labor force. So, since a bit less than 250,000 Americans found themselves newly out of work, some slightly larger number essentially concluded, "screw this--I'm gonna stop sending out resumes and interviews for awhile." Still, the lack of depth and detail in most news coverage means that the message will boil down to "unemployment dropped in July"--which, while untrue, works to the advantage of the President and the Democrats. And even those who do somewhat know what's up can argue with some justification that we're hitting the bottom of the recession, or that we've already done so; employment is, famously, a lagging indicator of economic health since businesses wait until they're confident of rising demand to resume new hiring. So by the time we actually start seeing employment increases, in all likelihood "growth" will have resumed months earlier. In more good news, average hourly wages went up, and the work week for those who have jobs got a bit longer.

Still, one piece of information buried deeper in the jobs data should be of much greater concern to economic policymakers than I expect it is. New York Times financial correspondent Floyd Norris sets it out:

Fewer people are losing their jobs. But long-term unemployment is higher than ever.

The number of unemployed people who have been unemployed for 14 weeks or less was 6.79 million in July, the lowest figure for that group since December. But the number unemployed for 15 weeks or more was 7.88 million, up 74 percent since December and the highest figure ever.

For the first time ever — or at least since the government started counting the figures in 1948 — more than a third of the unemployed have been out of work for at least 27 weeks. The average unemployed person had been jobless for less than 20 weeks at the end of last year. Now the figure is over 25 weeks.

A few months ago, I had a conversation with Anthony Carnevale, an economist at Georgetown and former Clinton administration official who has been one of the leading voices on the interrelationships between educational attainment, the labor market and the economy for more than twenty-five years. I've been a huge admirer of Dr. Carnevale for a long time, and the two occasions I've had to speak with him have been among the most enjoyable and enlightening professional conversations I've had. He was kind enough to let me put a partial transcript of our discussion online, but one thing he said that day came back to me as I was reading Norris's note about the long-term unemployed:

A New York Federal Reserve Bank study pointed out that 30 percent of the increase in unemployment prior to the 1991 recession was temporary. The view now is that from now on they’re always going to be structural: given the way the global economy works, by and large the low-skill low-wage jobs you lose won’t come back. The Federal Reserve Bank argues that there’s almost no temporary unemployment anymore; when you come out the other side, you’re looking at a different distribution. And one of the characteristics of it is that it’s more human capital-intensive. That’s a big reason why a lot of people never recover their earnings.

I don't know for sure (and I'm not sure it's possible to know for sure; I guess it depends on just how detailed is the information the Bureau of Labor Statistics collects), but I'm guessing that many/most of the nearly eight million long-term unemployed Americans are those with the least educational attainment and fewest transferrable skills. I have seen numbers on those who have lost jobs in this downturn, broken out by educational attainment: going by memory, I think about eight percent of those who had less than a high school education and were working at the start of the recession have lost their jobs, compared to about four percent of those with a high school degree or equivalency, and less than half a percent of workers with a four year college degree or a post-graduate degree.

Of course, there's always some hiring even in periods of overall job loss, and I've been hearing anecdotally about people taking what are called "survival jobs" that pay less than they made before the market plunged and for which they are, in terms of education and work history, overqualified. But that's not a new phenomenon of recessions, and presumably as aggregate job growth resumes those folks will move on to positions more in line with their past earning power and true level of skill. When that happens, just by virtue of having decent work histories and solid personal references/networks, many of those who now fill the ranks of the long-term unemployed probably will get rehired.

My concern is for their successors—the millions of Americans who are nearing or have entered early adulthood without learning or skills, and who are finding themselves totally unable to find even lousy jobs right now. If Carnevale is right and the "low-skill, low wage jobs don't come back"--and he's not the only one who thinks this; former Secretary of Labor Robert Reich has written repeatedly that the post-recession economy will look very different from what we knew in 2007--those folks are probably pretty much screwed unless we can reconnect them with educational opportunities and, no less important, socialize them for the world of work.