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The Nation | COLUMN ONE

Caught in a Jobless Free Fall

The U.S. economy is recovering, but job growth is not. Even highly skilled workers wonder if there's life after unemployment.

November 01, 2002|Peter G. Gosselin | Times Staff Writer

PITTSBURGH — When his position at a mid-size bank was eliminated during the economic doldrums of the early 1990s, Richard Coss Jr. reacted by striking out on his own as a consultant.

Even with a knack for numbers and a Duke University MBA, it still took him more than a year to land a regular job with Pittsburgh banking giant PNC Financial Services Group Inc. He ultimately was named an $80,000-a-year vice president.

But no sooner did the economy slip back into recession early last year than Coss was out again. And this time, the consulting has been harder to come by. Eighteen months after he was laid off, Coss, his wife, Janet, and their three children get by on $450 a week in unemployment from Pennsylvania and gifts from his retired parents.

"Sometimes I get down on my knees and pray because I don't know where this is going," said the 48-year-old Coss.

Through technological breakthroughs, seamless global connections and advances in management techniques, the American economy seems to have gotten away from the boom-bust business cycles of old. Recessions are shorter and expansions longer.

But these positive developments, a growing number of economists believe, have come with a troubling cost: lengthier, more debilitating spells of unemployment for many of those who do lose their jobs.

"It used to be that people entered and left the labor force fairly easily," said University of Chicago economist Robert H. Topel. Now, he said, in a remark about low-skilled workers that seems equally applicable to many higher-skilled ones, "leaving the labor force is like death: You go and you never come back again."

When the trend emerged in the early 1990s, it quickly was dubbed the "jobless recovery" and subjected to intense scrutiny. Did employers' reluctance to add to their payrolls mean that they no longer were willing to provide the amount -- and quality -- of work they once did? Did the brutal demands of global competition spell an end to good jobs at good pay in America?

Then along came the boom of the late 1990s -- with its spiraling stock prices and tumbling unemployment rates -- and all worry of a jobless recovery seemed to vanish.

But the problem did not go away. As the economy moved through its latest recession and now finds itself in a weak recovery, many of the patterns of the early '90s are reasserting themselves, distinguishing the two recent periods from every other recession and recovery of the last half-century.

"This is not your parents' business cycle," said Goldman, Sachs & Co. economist Ed McKelvey. "The economy is on a very different path than a generation ago."

Just ask Coss' father, Richard Sr., a retired union machinist who had been forced to go part time when work slowed down but never suffered a layoff in his nearly four-decade career. Watching his son go through a long bout of unemployment has been hard on the elder Coss.

"I don't really know what's going on in the working world as far as jobs go," he said.

It's no wonder. Until the last decade, American employers leaped at the chance to rehire the minute a recession was over. Government statistics from the late 1940s through the late 1980s show that in the first year of a recovery, U.S. payrolls typically grew by a quarter of a percentage point -- in today's terms, more than 300,000 jobs -- a month.

By contrast, companies greeted the end of the early-1990s recession by cutting, rather than adding, several hundred thousand workers in the first year. Since January, when the most recent recession is thought to have ended and the economy began growing again, payrolls have slipped by 17,000.

In addition -- and perhaps least noticed of the recent changes -- the average length of time that people who lose their jobs are out of work has been creeping steadily upward.

For much of the post-World War II era, average time out as measured at the peak of expansions was eight weeks, according to Labor Department statistics. But by the start of the early-1990s recession, it had reached 12 weeks, and it never fell below that level even during the most fevered moments of the subsequent boom.

During the 2001 recession, the figure hovered around 13.5 weeks. And in September, eight months after the presumed end of the recession, it stood at 17.8 weeks.

Some analysts have suggested that the increase is the product of changed behavior by certain subsets of the work force. Women, for instance, tended to give up trying to find jobs when they were laid off; as a result, they weren't included in calculations of the average length of unemployment spells. Now that they are full-fledged participants in the labor market, they keep looking when they lose jobs, and so they push the average up.

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