Don Peck: How a New Jobless Era Will Transform America
How should we characterize the economic period we have now entered? After nearly two brutal years, the Great Recession appears to be over, at least technically. Yet a return to normalcy seems far off. By some measures, each recession since the 1980s has retreated more slowly than the one before it. In one sense, we never fully recovered from the last one, in 2001: the share of the civilian population with a job never returned to its previous peak before this downturn began, and incomes were stagnant throughout the decade. Still, the weakness that lingered through much of the 2000s shouldn’t be confused with the trauma of the past two years, a trauma that will remain heavy for quite some time....
Historically, financial crises have spawned long periods of economic malaise, and this crisis, so far, has been true to form. Despite the bailouts, many banks’ balance sheets remain weak; more than 140 banks failed in 2009. As a result, banks have kept lending standards tight, frustrating the efforts of small businesses—which have accounted for almost half of all job losses—to invest or rehire. Exports seem unlikely to provide much of a boost; although China, India, Brazil, and some other emerging markets are growing quickly again, Europe and Japan—both major markets for U.S. exports—remain weak. And in any case, exports make up only about 13 percent of total U.S. production; even if they were to grow quickly, the impact would be muted.
Most recessions end when people start spending again, but for the foreseeable future, U.S. consumer demand is unlikely to propel strong economic growth. As of November, one in seven mortgages was delinquent, up from one in 10 a year earlier. As many as one in four houses may now be underwater, and the ratio of household debt to GDP, about 65 percent in the mid-1990s, is roughly 100 percent today. It is not merely animal spirits that are keeping people from spending freely (though those spirits are dour). Heavy debt and large losses of wealth have forced spending onto a lower path....
Over the past two generations, particularly among many college grads, the 20s have become a sort of netherworld between adolescence and adulthood. Job-switching is common, and with it, periods of voluntary, transitional unemployment. And as marriage and parenthood have receded farther into the future, the first years after college have become, arguably, more carefree. In this recession, the term funemployment has gained some currency among single 20-somethings, prompting a small raft of youth-culture stories in the Los Angeles Times and San Francisco Weekly, on Gawker, and in other venues....
But in fact a whole generation of young adults is likely to see its life chances permanently diminished by this recession. Lisa Kahn, an economist at Yale, has studied the impact of recessions on the lifetime earnings of young workers. In one recent study, she followed the career paths of white men who graduated from college between 1979 and 1989. She found that, all else equal, for every one-percentage-point increase in the national unemployment rate, the starting income of new graduates fell by as much as 7 percent; the unluckiest graduates of the decade, who emerged into the teeth of the 1981–82 recession, made roughly 25 percent less in their first year than graduates who stepped into boom times.
But what’s truly remarkable is the persistence of the earnings gap. Five, 10, 15 years after graduation, after untold promotions and career changes spanning booms and busts, the unlucky graduates never closed the gap. Seventeen years after graduation, those who had entered the workforce during inhospitable times were still earning 10 percent less on average than those who had emerged into a more bountiful climate. When you add up all the earnings losses over the years, Kahn says, it’s as if the lucky graduates had been given a gift of about $100,000, adjusted for inflation, immediately upon graduation—or, alternatively, as if the unlucky ones had been saddled with a debt of the same size.
Many of today’s young adults seem temperamentally unprepared for the circumstances in which they now find themselves. Jean Twenge, an associate professor of psychology at San Diego State University, has carefully compared the attitudes of today’s young adults to those of previous generations when they were the same age. Using national survey data, she’s found that to an unprecedented degree, people who graduated from high school in the 2000s dislike the idea of work for work’s sake, and expect jobs and career to be tailored to their interests and lifestyle. Yet they also have much higher material expectations than previous generations, and believe financial success is extremely important. “There’s this idea that, ‘Yeah, I don’t want to work, but I’m still going to get all the stuff I want,’” Twenge told me. “It’s a generation in which every kid has been told, ‘You can be anything you want. You’re special.’”
In her 2006 book, Generation Me, Twenge notes that self-esteem in children began rising sharply around 1980, and hasn’t stopped since. By 1999, according to one survey, 91 percent of teens described themselves as responsible, 74 percent as physically attractive, and 79 percent as very intelligent. (More than 40 percent of teens also expected that they would be earning $75,000 a year or more by age 30; the median salary made by a 30-year-old was $27,000 that year.) Twenge attributes the shift to broad changes in parenting styles and teaching methods, in response to the growing belief that children should always feel good about themselves, no matter what. As the years have passed, efforts to boost self-esteem—and to decouple it from performance—have become widespread....
According to a recent Pew survey, 10 percent of adults younger than 35 have moved back in with their parents as a result of the recession. But that’s merely an acceleration of a trend that has been under way for a generation or more. By the middle of the aughts, for instance, the percentage of 26-year-olds living with their parents reached 20 percent, nearly double what it was in 1970. Well before the recession began, this generation of young adults was less likely to work, or at least work steadily, than other recent generations. Since 2000, the percentage of people age 16 to 24 participating in the labor force has been declining (from 66 percent to 56 percent across the decade). Increased college attendance explains only part of the shift; the rest is a puzzle. Lingering weakness in the job market since 2001 may be one cause. Twenge believes the propensity of this generation to pursue “dream” careers that are, for most people, unlikely to work out may also be partly responsible. (In 2004, a national survey found that about one out of 18 college freshmen expected to make a living as an actor, musician, or artist.)...
In her classic sociology of the Depression, The Unemployed Man and His Family, Mirra Komarovsky vividly describes how joblessness strained—and in many cases fundamentally altered—family relationships in the 1930s. During 1935 and 1936, Komarovsky and her research team interviewed the members of 59 white middle-class families in which the husband and father had been out of work for at least a year. Her research revealed deep psychological wounds. “It is awful to be old and discarded at 40,” said one father. “A man is not a man without work.” Another said plainly, “During the depression I lost something. Maybe you call it self-respect, but in losing it I also lost the respect of my children, and I am afraid I am losing my wife.” Noted one woman of her husband, “I still love him, but he doesn’t seem as ‘big’ a man.”
Taken together, the stories paint a picture of diminished men, bereft of familial authority. Household power—over children, spending, and daily decisions of all types—generally shifted to wives over time (and some women were happier overall as a result). Amid general anxiety, fears of pregnancy, and men’s loss of self-worth and loss of respect from their wives, sex lives withered. Socializing all but ceased as well, a casualty of poverty and embarrassment. Although some men embraced family life and drew their wife and children closer, most became distant. Children described their father as “mean,” “nasty,” or “bossy,” and didn’t want to bring friends around, for fear of what he might say. “There was less physical violence towards the wife than towards the child,” Komarovsky wrote.
In the 70 years that have passed since the publication of The Unemployed Man and His Family, American society has become vastly more wealthy, and a more comprehensive social safety net—however frayed it may seem—now stretches beneath it. Two-earner households have become the norm, cushioning the economic blow of many layoffs. And of course, relationships between men and women have evolved. Yet when read today, large parts of Komarovsky’s book still seem disconcertingly up-to-date. All available evidence suggests that long bouts of unemployment—particularly male unemployment—still enfeeble the jobless and warp their families to a similar degree, and in many of the same ways....
The weight of this recession has fallen most heavily upon men, who’ve suffered roughly three-quarters of the 8 million job losses since the beginning of 2008. Male-dominated industries (construction, finance, manufacturing) have been particularly hard-hit, while sectors that disproportionately employ women (education, health care) have held up relatively well. In November, 19.4 percent of all men in their prime working years, 25 to 54, did not have jobs, the highest figure since the Bureau of Labor Statistics began tracking the statistic in 1948. At the time of this writing, it looks possible that within the next few months, for the first time in U.S. history, women will hold a majority of the country’s jobs.
In this respect, the recession has merely intensified a long-standing trend. Broadly speaking, the service sector, which employs relatively more women, is growing, while manufacturing, which employs relatively more men, is shrinking. The net result is that men have been contributing a smaller and smaller share of family income.
“Traditional” marriages, in which men engage in paid work and women in homemaking, have long been in eclipse. Particularly in blue-collar families, where many husbands and wives work staggered shifts, men routinely handle a lot of the child care today. Still, the ease with which gender bends in modern marriages should not be overestimated. When men stop doing paid work—and even when they work less than their wives—marital conflict usually follows....
“We could be headed in a direction where, among elites, marriage and family are conventional, but for substantial portions of society, life is more matriarchal,” says [W. Bradford Wilcox, the director of the National Marriage Project at the University of Virginia]. The marginalization of working-class men in family life has far-reaching consequences. “Marriage plays an important role in civilizing men. They work harder, longer, more strategically. They spend less time in bars and more time in church, less with friends and more with kin. And they’re happier and healthier.”...
In the mid-20th century, most urban black men were employed, many of them in manufacturing. But beginning in the 1970s, as factories moved out of the cities or closed altogether, male unemployment began rising sharply. Between 1973 and 1987, the percentage of black men in their 20s working in manufacturing fell from roughly 37.5 percent to 20 percent. As inner cities shed manufacturing jobs, men who lived there, particularly those with limited education, had a hard time making the switch to service jobs. Service jobs and office work of course require different interpersonal skills and different standards of self-presentation from those that blue-collar work demands, and movement from one sector to the other can be jarring. What’s more, Wilson’s research shows, downwardly mobile black men often resented the new work they could find, and displayed less flexibility on the job than, for instance, first-generation immigrant workers. As a result, employers began to prefer hiring women and immigrants, and a vicious cycle of resentment, discrimination, and joblessness set in.
It remains to be seen whether larger swaths of the country, as male joblessness persists, will eventually come to resemble the inner cities of the 1970s and ’80s. In any case, one of the great catastrophes of the past decade, and in particular of this recession, is the slippage of today’s inner cities back toward the depths of those brutal years. Urban minorities tend to be among the first fired in a recession, and the last rehired in a recovery. Overall, black unemployment stood at 15.6 percent in November; among Hispanics, that figure was 12.7 percent. Even in New York City, where the financial sector, which employs relatively few blacks, has shed tens of thousands of jobs, unemployment has increased much faster among blacks than it has among whites....
No one tries harder than the jobless to find silver linings in this national economic disaster. Many of the people I spoke with for this story said that unemployment, while extremely painful, had improved them in some ways: they’d become less materialistic and more financially prudent; they were using free time to volunteer more, and were enjoying that; they were more empathetic now, they said, and more aware of the struggles of others....
But for the most part, these benefits seem thin, uncertain, and far off. In The Moral Consequences of Economic Growth, the economic historian Benjamin Friedman argues that both inside and outside the U.S., lengthy periods of economic stagnation or decline have almost always left society more mean-spirited and less inclusive, and have usually stopped or reversed the advance of rights and freedoms. A high level of national wealth, Friedman writes, “is no bar to a society’s retreat into rigidity and intolerance once enough of its citizens lose the sense that they are getting ahead.” When material progress falters, Friedman concludes, people become more jealous of their status relative to others. Anti-immigrant sentiment typically increases, as does conflict between races and classes; concern for the poor tends to decline....
Indeed, this period of economic weakness may reinforce class divides, and decrease opportunities to cross them—especially for young people. The research of Till Von Wachter, the economist at Columbia University, suggests that not all people graduating into a recession see their life chances dimmed: those with degrees from elite universities catch up fairly quickly to where they otherwise would have been if they’d graduated in better times; it’s the masses beneath them that are left behind. Princeton’s 2009 graduating class found more jobs in financial services than in any other industry. According to Princeton’s career-services director, Beverly Hamilton-Chandler, campus visits and hiring by the big investment banks have been down, but that decline has been partly offset by an uptick in recruiting by hedge funds and boutique financial firms....
We are in a very deep hole, and we’ve been in it for a relatively long time already. Concerns over deficits are understandable, but in these times, our bias should be toward doing too much rather than doing too little. That implies some small risk to the government’s ability to continue borrowing in the future; and it implies somewhat higher taxes in the future too. But that seems a trade worth making. We are living through a slow-motion social catastrophe, one that could stain our culture and weaken our nation for many, many years to come. We have a civic—and indeed a moral—responsibility to do everything in our power to stop it now, before it gets even worse.