Where Did the Jobs Go--and How Do We Get Them Back?

Scott Bittle, Jean Johnson

• Publisher: William Morrow Paperbacks
• Year: 2012
• ISBN:
  9780062096678
• Topic: Politics & International Relations
• Subtopic: Environment & Energy Policy
• Index: Politics & International Relations

Your guided tour to America's employment crisis, the title says it all. Where Did the Jobs Go—and How Do We Get Them Back? is a clear, nonpartisan, surprisingly entertaining look at our nation's current joblessness mess and how we can get ourselves working again. Written by Scott Bittle and Jean Johnson, authors of the breakout bestseller Where Did the Money Go?, this essential primer addresses the most serious problem facing Americans today with intelligence, refreshing candor, and sparkling wit, enabling voters to separate the facts from the politicians' hot air and political spin.

CHAPTER 1

IT’S NOT OVER UNTIL IT’S OVER

Six Reasons to Worry About Jobs Even If You Have One

So no one told you life was gonna be this way. Your job’s a joke, you’re broke, your love life’s DOA.

—The Rembrandts, “I’ll Be There for You”

We can’t help you with your love life, but we have got some thoughts on the jobs and money part of it. The way most Americans see it, the economy just isn’t providing enough good jobs at good wages for people who need and want them.

Most of us hoped that by now the United States would be closing the door on all the economic fallout of the Great Recession. Some trends have improved, but we still face an uncertain, troubled road ahead on jobs. Will we have enough of them? And will they be the kinds of jobs that give people a secure and decent future?

“WHAT ARE THESE? LIKE, FAMOUS CHICKENS?”

We opened the chapter with a couple of lines from the theme song from Friends,^* and the show isn’t a bad place to start. The actors who played the six “friends” certainly did well enough. At the time, they earned some of the highest salaries ever paid to performers in a TV comedy series.¹ But the work lives of the twentysomething characters they played—Chandler, Ross, Joey, Monica, Rachel, and Phoebe—were a mixed bag. In one episode, the six go out to dinner to celebrate Monica’s recent promotion. Chandler, Ross, and Monica have good jobs in promising careers. Meanwhile, Rachel, Joey, and Phoebe are bouncing from job to job, barely able to make ends meet. At a posh restaurant, the more prosperous friends enjoy a good meal and generally make merry. Meanwhile, their less securely employed pals nervously scan the menu, where even the chicken dishes are pricey.² Outrageously pricey. At one point Joey asks, “What are these? Like, famous chickens?”³

This may be one of the few concessions to economic reality during the entire run of the series. After all, even the intermittently employed Joey, Phoebe, and Rachel lived in improbably huge Manhattan apartments. Yet this dinner among friends mirrors the broader experiences of Americans overall. Those of us with good jobs and prospects are enjoying dining out again. Those of us without good jobs or with no job at all are worrying and scrambling to pay the bills.

LIVE LONG AND PROSPER?

The economic nosedive of 2008 and 2009 jangled everyone’s nerves—even Americans who managed to survive with jobs, homes, and savings relatively intact. Businesspeople and entrepreneurs were rattled as well—even very successful ones have been slow to expand their businesses and hire new workers. What many of us don’t realize, however, is that according to the numbers, the United States has actually been stumbling for a good decade or more. Here’s some of what we’re up against:

The country lost millions of jobs in the Great Recession, and it will take years to get them back.

Between the end of 2007 and the beginning of 2010, the U.S. economy lost about 8.4 million jobs.⁴ Companies laid workers off, and many folded, so their entire workforces lost their jobs. State and local governments have been slashing payrolls as well.

It could be years before unemployment rates return to prerecession levels—if they ever do.

Before the global economic crisis turned into a tailspin, unemployment rates hovered around 5 percent. At the recession’s worst points, they doubled.⁵ But even though the U.S. economy is picking up, a complete bounce-back on jobs doesn’t seem to be in the cards anytime soon. Economists at the Federal Reserve predict that unemployment will be between 7.1 and 8.4 percent in 2012.⁶ Economists at the nonpartisan Congressional Budget Office are not projecting a return to a rate near 5 percent until 2016.⁷ Some economists question whether a return to that 5 percent level is even possible given the changes in the way the U.S. and world economies function now, along with the layoffs resulting from reducing the size of government (federal, state, and local) to tackle deficits. The numbers can become a blur, but here’s the bottom line: every percentage point of unemployment means about a million and a half Americans who want jobs but can’t find them.⁸

That’s an average—the jobs picture is even worse for some groups.

Even in the good old days of 5 percent unemployment, some Americans were far more likely to be out of work than others. According to the Bureau of Labor Statistics (BLS), the unemployment rate for African Americans is generally about twice that of whites.⁹ People under nineteen have higher jobless rates.¹⁰ And in good times and bad, education matters. During 2010, the unemployment figure for college graduates was only 4.7 percent. Meanwhile, the jobless rate for people without a high school diploma was 14.9 percent.¹¹ As the BLS itself points out, “Regardless of whether the economy is booming or contracting … more education is associated with less unemployment.”¹²

The U.S. economy is not creating new jobs the way it used to.

The U.S. economy has had plenty of ups and downs over the past fifty years, but until the last decade, it cranked out new jobs on a pretty reliable basis. Between 1940 and 1950, the number of paid jobs in the United States grew by a whopping 38 percent.¹³ Granted, part of that was World War II itself and the “Rosie the Riveter” wartime jobs, which was followed by the amazing postwar boom. But even in the 1980s and 1990s—when there were a couple of really nasty recessions—paid jobs increased by 20 percent.¹⁴ So how has the United States done now that we’ve entered the twenty-first century? When the government completed its analysis of what happened between 2000 and 2010, even many experts were surprised to learn that the U.S. economy lost more jobs than it created during that period.¹⁵ That’s even worse than it sounds because there’s no such thing as holding steady in this area. The various experts don’t necessarily agree on exactly how many jobs we need to create to keep up with population growth, but the estimates range from about 110,000 to 150,000 a month.¹⁶ If the economy doesn’t come up with something in that range, we’re going backward.

American families have been losing financial ground.

When you take inflation into account, the typical American family is bringing in less cash than it did back when “ Mambo Number 5” was topping the charts^* and George Clooney was still playing Dr. Ross on ER.¹⁷ According to census data analyzed by the Wall Street Journal, the inflation-adjusted income for a typical U.S. household fell 4.8 percent between 2000 and 2009.¹⁸ This is the first time Americans have lost ground in this way since the government began collecting the figures in the 1960s.¹⁹ Meanwhile, the number of Americans who are poor has edged up. In 2009, more than 43 million people had incomes below the government’s official poverty line of $11,161 for an individual under sixty-five and $21,954 for a family of four.²⁰ As the Journal pointed out, the economy seems to have been especially brutal for younger Americans—more than four in ten people between twenty-five and thirty-four reported incomes below the poverty cutoff.²¹

A lot of us are in jobs that are insecure and almost destined to be low-paying.

If you have special skills and work in a field that is growing like gangbusters, chances are you will do pretty well finding and keeping a job. And you’ll probably be well paid too. After all, employers need you, and since there aren’t that many other people who can do what you can do, the boss is more likely to cough up extra dough to hire you and keep you on the job. If you don’t have any specific skills—or you have skills that gazillions of other people have—you’re just not going to do as well. According to a study by the McKinsey Global Institute, more than seven in ten Americans are “in jobs for which there is low demand from employers, an oversupply of eligible workers, or both.”²² These researcher types specialize in dry language, but we’re sure you get the picture. To add to the gloom, the Bureau of Labor Statistics projects that the largest number of job openings through 2018 will be for cashiers, waiters and waitresses, and office clerks—positions that don’t usually offer the best salaries or benefits.²³ And what happens when your job can be done by someone in another country who is more than content to take a fraction of what you’ve been earning? Well, your job prospects are even grimmer.

That’s a formula for the rich and talented getting richer, and the rest of us muddling along. And that in fact is what has been happening for quite a while now. Over the past two decades, income for the top 10 percent of American households grew at roughly double the rate of just about everyone else.^24*

COLLATERAL DAMAGE

These six trends are pretty bad by most Americans’ lights. Lots of people are out of work, and even people with jobs are losing ground economically. But it’s worse than that. Generally, we think of losing a job or having to work at a job that doesn’t pay enough or offer enough security and benefits as an individual problem. If you’ve been there for even a short period of time, we don’t have to tell you how much anguish and heartbreak it causes. But these bitter individual experiences set other problems in motion—and insidious ones at that. There’s a domino effect when too many people are out of work or are scraping by in low-paying jobs with little future. Consider these:

• Joblessness means less consumer spending. When people don’t have jobs or are in jobs that don’t pay enough, they cut their spending to the bone. That means that the people who are trying to make a living selling things and offering services see their incomes drop as well. In many cases, they too have to lay off some of their workers to keep their businesses afloat. It’s a fact of economic life: businesses need customers who have enough money to buy what they’re selling, and when more people have jobs and money to spend, companies expand and hire more workers.

• Joblessness leads to foreclosure and bankruptcy. People who don’t have jobs or who end up working at jobs that pay less than their old job often lose their homes and their retirement savings, or even declare bankruptcy.²⁵ Yes, during the mortgage bubble some people bought houses they couldn’t afford, and when the economy was soaring some people just kept whipping out the plastic anytime they saw anything their little hearts desired. They didn’t save for a rainy day, and when the rains came, they went underwater. Maybe you’re not feeling so sympathetic to everyone who’s in bad straits these days; that’s really up to you. But the truth is that foreclosures and bankruptcies spread damage far and wide. As people used to say back in the seventies, they’re just not good for children and other living things. Lenders don’t get their money back (and remember, not all lenders are those humongous banks and credit card companies we love to hate). Foreclosures bring down property values for people living nearby, and that includes many who borrowed wisely and have made every single payment on time. Families, neighborhoods, local merchants, and entire communities suffer too.

• Joblessness means less money for cities, states, and the federal government. Unless you were asleep for the past few years (and if you were, congratulations; you couldn’t have picked a better time), you know that government budgets nearly everywhere have been awash in red ink. One major reason is that unemployed people and people who are earning less than they used to don’t pay as much in taxes. They’re not making as much money, so they pay less income tax. They buy less, so they pay less sales tax. Foreclosures and falling home prices mean local governments collect less money from property taxes. As it turns out, this is a gift of red ink that can just keep on giving. When states and cities have less tax money coming in, they have to cut their own spending, so they lay off workers. Plus they postpone building and refurbishing things, so the companies and workers who might have worked on those projects lose out too. Then there’s the double whammy effect (to use the technical term): even though high unemployment rates and reduced family incomes mean tax revenues are lower at every level of government...