Monday, September 5, 2011
Economists may say the recession is over and we're moving toward recovery but this Labor Day we find many Americans are still out of work and some are underemployed.
Economists may say the recession is over and we're moving toward recovery but this Labor Day we look at a report that finds many Americans are still out of work and some are underemployed. The California Budget Project found California workers still face the toughest job market in decades.
Alissa Anderson, Deputy Director, California Budget Project
CAVANAUGH: On this laborer day, a new report finds California and the rest of the nation struggling with high rates of unemployment, and a recovery that seems stalled. I'd like to welcome my guest, Alisa Anderson, deputy director of the California Budget Project. Hello.
ANDERSON: Hello. Thanks for having me.
CAVANAUGH: Now, economists say the great recession is over, but for most people, the recovery hasn't really kicked in either. So according to your new report, where does that leave us?
ANDERSON: Well, I think you're right. For most workers and their families, it still feels like we're in a very deep downturn, and that's because the job market remains incredibly weak. Our report shows that fewer than three out of five working age California abs have jobs right now. That's lower than where we were a couple of years ago during the depth of the downturn. And we haven't seen employment levels nearly this low since the mid-1970s, which was a time when far fewer women were in the work force. Half of Californians unemployed, about a million cal Californians, have been sending out resumes without any luck at all for over six months and about a third have been looking for work for at least a year. We've never seen this many people without work for this long.
CAVANAUGH: What is the California budget project?
ANDERSON: It's a nonpartisan, nonprofit public policy research group.
CAVANAUGH: And what do you study?
ANDERSON: We take a look primarily at public policies related to the state budget. My particular job is to take a look at the laborer market and analyze trends and wages and incomes, and take a look at how Californians are fairing.
CAVANAUGH: So you just outlined there some really rather startling and sobering statistics. If you are an unemployed person in California who has been laid off, how difficult is it to get back in the work force?
ANDERSON: Well, the reality is for most of the unemployed, there are literally no jobs to be found. Nationwide, there are more than four people looking for work for every job opening. So what that means is even if all of the open positions were filled, the vast majority of the unemployed would still be out of luck. So it's very tough right now.
CAVANAUGH: You have some statistics in this report about how many jobs were lost in California and conversely how many jobs have been created.
ANDERSON: That's right. We lost nearly 1.4 million jobs during the recession in California. And we're still down by about 1.1 million jobs. And that actually under states the massive hole in our job market. Because more California abs need jobs today than at the beginning of the recession because of population growth. And what's worse is that job growth has nearly ground to a halt in recent months. So economists are increasingly concerned that we're looking at a very slow recovery. And that's bad news for people who are out of work, and people news for workers as well.
CAVANAUGH: Now, didn't we hear just a little bit while ago that hiring in the private sector was improving?
ANDERSON: It was. For a while there, it looked like we were adding jobs at a relatively -- are, not quite strong but a decent pace. But things have really slowed down in recent months. In particular, part of what's holding back recovery in the job market is that we're losing public sector jobs. State and local budget cuts have directly resulted in job loss. And over the past year, each time the job market takes a few steps closer to recovery as the private sector adds jobs, we continue to lose public sector job, particularly at K12 schools and community colleges.
CAVANAUGH: Give us a sense of what the competition is like for those seeking employment now?
ANDERSON: Again, our national statistics show that there are more than four people looking for work for every job opening. And in California, we think that that's a little bit harder, we think competition for jobs is a bit higher because we have the second highest unemployment rate in the nation.
CAVANAUGH: Are workers taking jobs they're over qualified for?
ANDERSON: I certainly think it's likely that workers are taking any job that they can because competition is so tough. And I think this raises an important point, which is that the weak job market isn't just tough for people who are out of working it's tough for workers too. We know that many workers are under employed right now. Many have taken part-time jobs because they can't find full time work.
CAVANAUGH: I'm speaking with Alisa Anderson. She's deputy director of the California budget project. They just released a new report on unemployment in California. Now, your report warns that some economists believe the great recession is actually transforming into something they call the great stagnation. What does that mean?
ANDERSON: Well, it means that over the past six months we've seen national economic growth slow, and we're not seeing enough growth to produce enough jobs to significantly reduce our sky high unemployment rate. So going forward we not only need to get everyone back to work who's lost their job during the recession, but the fact is, the population continues to grow. More people graduate from college and go out looking for jobs. And so we need much stronger economic growth to produce enough jobs for the next generation of workers.
CAVANAUGH: I just want to remind our listeners if they would like to join the conversation, we can take their calls at 1-888-895-5727. And Alisa, give us an idea of how high unemployment plays into the over all recovery. In other words, I know that you would want to know economy that is creating a lot of jobs, but not having jobs, having unemployment also slows down the recovery.
ANDERSON: Exactly. Well, the weak job market is very tough for workers because when competition for jobs is high, many workers have little power to negotiate for pay increases. And so we've seen the weak job market erode the purchasing power of many workers' earnings over the past few years. So right now, the typical California worker, that's the worker right at the middle of the earnings distribution, earns less per hour on an inflation adjusted basis than at any point in the past ten years. And employers have also slashed workers' hours, so many workers are bringing home even smaller weekly paychecks. So families' incomes have taken a major hit. That means they have had to cut back on their spending. And that's one of the key factors holding back the recovery.
CAVANAUGH: I understand your point. Go ahead. I'm sorry.
ANDERSON: Oh, I was going to say that businesses say that their number one problem is weak sales. So they're not going to start hiring again until more customers come through their doors.
CAVANAUGH: One of the life lines for the unemployed is unemployment benefits of course. But for the long-term unemployed those benefits may expire in a few months; is that right?
ANDERSON: Well, what might happen is -- so, in California workers can receive up to 99 weeks of unemployment insurance benefits. That includes state benefits as well as federally supported benefits. Those federally supported benefits that provide additional weeks are slated to expire at the end of this year. And we certainly know that at the end of this year, there won't be enough jobs to significantly reduce the ranks of the unemployed. So we think it's important for Congress to continue providing those federally supported unemployment insurance benefits. They're not just good for the unemployed. They're good for the economy as a whole. And that's because they enable the unemployed and their families to keep spending while they search for work. So that keeps dollars flowing to local businesses and helps to boost the economy.
CAVANAUGH: I want to talk about California specifically. And even more specifically, San Diego. Your report finds that California is adding jobs at a faster pace than U.S. as a whole even though we still have one of the highest unemployment rates in the country.
ANDERSON: That's right. And this is really significant, because California was hit harder by the recession than most other states. And so part of what's driving California's stronger job growth is it high-tech industries. We've seen strong gains in everything from software development to computer manufacturing. Particularly in the silicon valley and parts of the bay area. California has also made stronger gains than the U.S. as a whole in tourism related industries. Because tourism is starting to pick back up again. And we also gained a modest number of construction jobs over the past year whereas nationally, there was no gain at all in the construction industry. And that's because federal recovery dollars are funding several projects throughout the date, like highway improvement projects.
CAVANAUGH: I see, so at least we're in a little bit of a better position. What about San Diego?
ANDERSON: Well, San Diego actually added the second largest number of jobs of any metropolitan area over the last year. Right over the San Jose area. And that's significant in light of the fact that only nine out of California's 28 metro area it is saw any job growth at all last year. And San Diego is seeing gains across a broad range of services. San Diego has several advantages. For example, location. Tourism is key to the local economy. And tourism is starting to pick back up again. Also San Diego benefits from a highly educated work force. And so that's helping to fuel growth in a number of industries, like scientific research and development and biotech. And we've also seen strong gains in private colleges and universities. As well as healthcare services. And those are two sectors of the economy that continue to post gains all throughout the recession and are still growing at a relatively rapid pace right now.
CAVANAUGH: As you say, relatively speak, that's really great news. But one of the things that I think is really essential in your report is that if there's still high unemployment, and if the economy still is not growing, kind of everybody suffers in sort of a blow-back kind of way, with lower wages and less hours and things are not progressing in a way that would bring us into economic good times.
ANDERSON: Exactly. Everyone suffers when the economy is weak. And consumer spending is a key driver of the economy. When so many people are out of work, it means they're spending less, businesses have fewer customers, and they're not going to hire until more customers come back.
CAVANAUGH: You mentioned that one of the things that you're recommending is that Congress continue unemployment benefits because they add stability to the economy when so many people actually cannot find work. What are some of the other recommendations that you made with this report?
ANDERSON: Well, another way to boost consumer demand is to sustain public sector jobs. Again, public sector jobs' losses have off set some of the gains we've made in the private sector. Public sector workers from teachers to Moors to firefighters not only provide an educated work force for California and safe communities but they also spend their incomes locally. So that boosts businesses and the broader economy. So we think policy makers should minimize spending cuts that cost jobs and threaten to hold back the recovery even further.
CAVANAUGH: Were you surprised by anything that you found out doing this report?
ANDERSON: Actually, yes. The most surprising finding was that while women make up nearly half of the work force, they've gained just one of the ten jobs added over the past year nationwide. Initially, some researchers thought this might reflect the fact that men lost a much larger number of jobs during the recession. So that means that there are more unemployed men than women right now. So we might expect men to gain back more of the jobs. But that's not a full explanation because women are actually still losing jobs across a number of sectors where men are making gains. And so this has intrigued researchers for a while. But as businesses down size, they're cutting back on administrative support positions, and women make up most of the workers in those positions. So that could help explain why women are still losing jobs across a number of industries. Another factor is that public school employment is still declining, and most public school workers are women.
CAVANAUGH: After having delved into this, Alisa, what is your take of how hard it's going to be to pull out of these hard times?
ANDERSON: I think it's going to take several more years. National forecasters have started to revise their projections downward. They're saying we may not see full recovery until late in the second half of this decade. So I think families are going to continue to struggle for quite a bit longer.
CAVANAUGH: Well, at least you brought us a little bit of good news here in San Diego. So I appreciate that very much. I've been speaking with Alisa Anderson, deputy protector of the California budget project. Thank you so much.
ANDERSON: Thanks so much for having me.