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For many unemployed workers, jobs aren't coming back

America Out of Work

The U.S. unemployment rate will remain elevated for years, experts say, a grim prospect for Americans who have exhausted their benefits.

September 05, 2010|By Alana Semuels, Los Angeles Times

Trillo said he thought the interview went well but hasn't heard back from the recruiter. In the meantime he's studying for his high school equivalency exam and scouring online job sites, applying for as many as a dozen positions a week.

His parents, both immigrants from Mexico, let him live rent-free in their half of a cramped duplex. His father works long hours driving a big rig. His mother is a caretaker for an elderly couple. They've been supportive, always offering encouragement. That, Trillo said, sometimes stings worse than a rebuke.

"I don't really even feel like a man, because I have no work," he said.

For the U.S. labor market to regain all the jobs it had when the recession started in December 2007, employers would need to boost their payrolls by 7.6 million positions. That figure doesn't include the roughly 125,000 jobs a month the country must create just to keep up with new entrants into the labor force.

To get the national unemployment rate back to 5%, where it was before the downturn, would require the economy to generate about 17 million jobs — or about 285,000 a month for five straight years — according to Heidi Shierholz, a labor economist at the Economic Policy Institute in Washington.

To appreciate the enormity of that employment hole, consider that U.S. employers have shed 283,000 jobs since May.

Ask economists to project which industries might spark robust job creation and the news isn't encouraging for America's 14.9 million unemployed workers.

Sectors that traditionally have led the nation out of recession — including home building and financial services — are laboring amid a housing glut and a credit freeze. The U.S. auto industry, long under assault by foreign manufacturers, just completed a brutal downsizing. Outsourcing of call centers and other service jobs to places such as India is growing too. Meanwhile, U.S. productivity grew steadily through 2009 and into the first quarter of this year, in part because many employers have replaced people with technology and are working their existing staffs harder.

"It's going to take a long time to get back," economist Shierholz said. The nation is looking at "eight or nine years of elevated unemployment, and we just haven't seen anything like that."

The U.S. safety net wasn't designed to withstand such a strain. The extent and duration of unemployment benefits vary by state, but 26 weeks is typical. Several federal extensions have increased that to 99 weeks in California and other hard-hit states. Even so, an estimated 3.5 million Americans will have run out of benefits by the end of the year. About 180,000 Californians have already fallen off the rolls.

There are few other places to turn. Applications for federal food stamps and state programs such as CalWorks, which provides temporary assistance to families with children, are up sharply in recent years. But because asset limits for applicants are so strict, many of the unemployed don't qualify.

Veasley-Fields, the unemployed secretary, is now considering applying for Social Security benefits when she turns 62. That will mean reduced benefits in her later years. But with the job market so poor and retraining opportunities limited for someone her age, she said she may have no choice. Others are coming to the same conclusion. A record 2.74 million seniors applied for Social Security in 2009; more than 70% of them sought early benefits.

Desperation is growing, said Ofer Sharone, an assistant professor at MIT's Sloan School of Management who has spent the last year interviewing dozens of long-term jobless workers.

"The U.S. is clearly not equipped to deal with this high level of unemployment," Sharone said. "People are running out of benefits, health insurance, retirement and pensions."

Many are turning to traditional networks of family and friends.

Two years ago, Southern California native Ryan Payne was a mergers and acquisitions associate at a Manhattan investment bank earning a base salary of $140,000 a year. Then came the Wall Street meltdown. As one of the newest members of his firm, he was among the first to go when the layoffs came. Saddled with $100,000 in student loans and consumer debt, the 33-year-old moved back in with his parents in Malibu. He now trades commodities online from his home computer.

Handsome and genial, Payne uses his ample free time to exercise and pursue whims such as improv comedy. He formed a club of other jobless professionals that he cheekily named the Westside Unemployment Appreciation Team. Members, known as "enlightened slackers," gather occasionally for low-cost outings and a few laughs.

But in more reflective moments, Payne, who holds an MBA and a law degree, admits he's not where he thought he'd be at this time of his life.

"I live with my parents and I drive a Saturn," he said. "I need to figure out how I contributed to this.… I need to get some core, organic sense of success back."

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