Left Margin

The Theory of "Structural" Unemployment and the Jobs
That Aren't Coming Back

By Carl Bloice - BlackCommentator.com Editorial Board
Black Commentator
July 8, 2010

http://www.blackcommentator.com/383/383_lm_structural_unemployment.php

Is there any hope for the unemployed? Apparently not.
Many, says Chrystia Freeland, global editor-in-chief of
Reuters news, are people "on the wrong side of
history." The comment came last Saturday during one of
CNN's innocuous chats about the state of the economy
where people of note sit around and try to spell out
what has gone wrong. Freeland, 32, a Harvard graduate
and Rhodes Scholar, was explaining how the stubborn
joblessness in the U.S. wasn't necessarily the result
of the recession but is rather "structural," that is,
the result of those looking for work and not finding it
lacking the requisite skills for today's economy. Her
fellow panelists seemed to agree, one of them, Lakshman
Achuthan, managing director of Economic Cycle Research
Institute, saying that most of the jobs being wiped out
daily "will not come back." Then, the moderator read
the words of some Republican politician putting
responsibility for the jobs crisis on President Obama
saying, "I smell the coming of midterm elections." They
all giggled.

Frankly, I couldn't find anything funny about it. The
actions of those in Congress that have held up the
extension of benefits to the long-term unemployed are
not only politically reactionary but also morally
repugnant. It's easy to understand their continued
assault on the concept of empathy; they don't have any
and don't think anyone else should. And, as far as
working women and men being on the "wrong" side of
history, well that depends on who's making it. The
fellow who said the jobs are not coming back failed to
say where they went.

It's all so cynical and so much hogwash.

Yes, some of the unemployed would have a better shot at
finding work if they had great technical training, and
yes there are vacancies in some skilled positions. But
there are skilled workers in the ranks of the jobless.
I recently ran across the words of one a 42-year old
Army veteran who used his GI Bill to get a Computer
Science degree. After 12 years of working as a
programmer, he told About.com, he was laid off. He said
that for a year he had submitted resumes and been
interviewed seven times but "sadly there are too many
programmers who are also out of work, there are always
more than 60 other computer programmers applying for
the same job."

"The unemployment benefits are a saving my life. I am
also a diabetic. Without these benefits my diabetes and
health would be out of control," he concluded.

Last week, the New York Times ran a story on its
business page suggesting African Americans are more
upbeat about the state of the economy than others. It
seems 53 percent of the black people polled by the Pew
Research Center say they believe the economy is
improving as opposed to 40 percent of whites. The
report found the number "seemingly counterintuitive"
but the writer, Floyd Norris, quickly came to the right
conclusion as to why: wishful thinking. For the first
time there's a black man in the White House and we want
him to succeed. It's a hope against hope. But that
doesn't make the numbers looks any better.

"While nearly all Americans have suffered, blacks and
Hispanics have borne a disproportionate share of both
job losses and housing foreclosures," says the Wall
Street Journal.

Surveying the jobless statistics for June, economist
Dean Baker of the Center for Economic and Policy
Research observed, "The employment-to-population (EPOP)
ratio fell to 58.5 percent, reversing gains from the
prior three months; although this is still 0.3
percentage points above the low hit in December. This
decline was concentrated among men who saw their EPOP
fall by 0.3 percentage points, as their unemployment
rate edged up from 9.8 to 9.9 percent. The EPOP for
women was unchanged, with their unemployment rate
falling from 8.1 percent to 7.8 percent.

"Black men were hit especially hard as their EPOP fell
from 58.5 to 57.3 percent.

The EPOP for black teens fell by 1.8 percentage points
to 14.4 percent, just above the all-time lows hit in
November and December," said Baker.

Another recent research finding the major media didn't
report on was spelled out June 30 by Sheree Crute and
published June 30 on The Root (
http://tinyurl.com/32craxm). It was called "The
Recession's Long-Term Impact on Black Kids," and said,
"Our children may be most vulnerable to damage from the
economic downturn."

"As adults wrestle with rising foreclosure rates and
disappearing jobs, child-development experts are
reporting that children may end up shouldering some of
the most severe, long-lasting consequences of the
recession of 2008, according to the Foundation for
Child Development (FCD)," wrote Crute. The foundation
looked at seven key areas to see how the nation's
children are doing amid the recession and what it means
for their futures. "The results show that kids from
preschool to age 19 may have to fight the detrimental
impact of America's financial crisis for much of their
lives. African-American kids will be "harder hit than
their white counterparts because a larger proportion of
children of color live in poverty."

The Composite Child Well-Being Index reveals that
"virtually all of the progress made in family economic
well-being since 1975 will be wiped out for many," as
individuals, organizations and governments trim
budgets. Kenneth C. Land, a professor of sociology and
demography at Duke, who conducted the research and
wrote the CWI report, explained, "In order to measure
the full impact of the recession, we looked at trend
data from 1975 to 2008, then projected what may happen
through 2012." The survey numbers revealed a host of
challenges for children in middle- and lower-income
families, "but in each category, the risks would be 1.5
percent to 2 percent higher for African-American
children," he says.

"This situation will be particularly hard on African-
American children because they were already
disproportionately affected by poverty before the
recession began," said Alvin Poussaint, M.D., an expert
on children's mental health and a professor at Harvard,
after reviewing the CWI at The Root's request. "What we
have here is a series of tragedies waiting to happen."

Crute writes, "One other deeply disturbing trend
highlighted in the CWI is the increasing alienation of
young people who see no clear path to economic
advancement. African-American kids - who, the CWI
reports, will experience an unemployment rate near 40
percent - are particularly vulnerable. "It starts with
the cuts we are seeing in pre-kindergarten programs
around the country and extends to adolescents," Land
says. "We are picking up increases in detached youth,
teens who are not enrolled in school or employed.
Without these social bonds, we may see upticks in
violence and risky behaviors."

Crute goes on to talk about the possible ways to
ameliorate the effects of the economic crisis on
African American youngsters, including the potential
role of the church, mentoring programs and family and
community connectedness.

Of course, nothing would help more than their parents
having jobs.

Being unable to collect further unemployment benefits
after being out of work for a long time is going to
make life a whole lot rougher for the jobless workers
and their kids.

Some have attributed the Right's unconcern for the
plight of the unemployed to ideology, a sort of tea
party notion that a government that actually steps in
to aid the victims of the economic crisis is too big.
Another explanation is that it all flows from the
cynical decision of the Republican Party of "no" to
oppose anything proposed by the Obama White House, and
possibly a motive of hoping for the worse economic
conditions by the time of the November elections. A
third, and quite plausible, suggestion has been made by
AFL-CIO President Richard Trumka, who said the other
day, "In a treacherous economy, our leaders should
share the goal of creating sustainable, broadly shared
prosperity. Instead, it seems congressional Republicans
are determined to create a desperate workforce, willing
to take any jobs at any pay rate under any
circumstances. It's a dream come true for corporations
that have pushed for 30 years to turn America's middle
class into a demoralized, low-wage and submissive
workforce."

Trumka went on. "How any member of Congress can head
home for this July 4th recess and talk about the
November election without having voted for jobs and
extended unemployment aid is beyond me."

Which returns us to Freeland and company and this
"structural" unemployment and to the jobs that "will
never come back."

"Wall Street has a plan and a new logic that is quietly
infiltrating the media and policy circles," wrote Less
Leopold on the Huffington Post last week. "It's called
`structural reform.' Although it is likely to involve
some additional pain and suffering, it's being sold as
the new magic bullet for our ailing economy."

Leopold continues, "Structural reform is Wall Street
speak for reducing what is often called the `social
wage' for working people in every way possible:
increasing the retirement age and cutting Social
Security benefits, government employment and benefits,
funds for public education, defined benefit pensions,
and health care expenditures....and of course, extended
unemployment benefits as well. (The Senate's refusal,
yet again, to extend unemployment for 1.3 million laid-
off workers comes straight from the `structural reform'
playbook.)

"Allegedly, the net result of these `reforms' is to
reduce public debt while making the labor market more
"supple" so that employment and wages can rise and fall
quickly in response to shifting supply and demand. This
`freer' labor market reduces the employer's cost of
hiring workers, which is supposed to trigger a major
jump in private sector employment."

"In truth, `structural reforms' doesn't even touch the
heart of the crisis - tragically, they'll only make it
worse. The real heart of the problem is too much wealth
in the hands of the few and too much power and wealth
controlled by Wall Street," concludes Leopold, the
author of The Looting of America: How Wall Street's
Game of Fantasy Finance Destroyed Our Jobs, Pensions,
and Prosperity-and What We Can Do About It. (Chelsea
Green Publishing, June 2009).

"There is little basis for a hope of an improvement
based on the establishment data," says Economic Policy
Institute economist Heidi Shierholz. "With state and
local governments cutting back to deal with deficits,
house prices falling again, and wages not keeping pace
with inflation, there is little hope for a robust
growth any time soon. It is likely that the
unemployment rate will rise in the second half of the
year," she continues, "With a 9.5% unemployment rate
and the private sector not yet able to provide a robust
recovery, Congressional inaction in passing policies
that support economic growth, including renewing the
extended jobless benefits in the Recovery Act and
providing fiscal relief to states, is inexcusable."
__________________

BlackCommentator.com Editorial Board member Carl Bloice
is a writer in San Francisco, a member of the National
Coordinating Committee of the Committees of
Correspondence for Democracy and Socialism and formerly
worked for a healthcare union.

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