Jobless stat is worst in 21 years

22.1% of all unemployed idle for 6 months in '03

More college grads seeking work

Concern raised about loss of high-quality positions

March 05, 2004|By Michael Oneal and T. Shawn Taylor | Michael Oneal and T. Shawn Taylor,CHICAGO TRIBUNE

As the nation's 8.3 million jobless wait for evidence that a growing economy will finally lead to robust hiring, one thing is clear: Long-term unemployment is the worst it has been in this country for more than 20 years.

According to a new study by the Economic Policy Institute, a Washington think tank, 22.1 percent of all unemployed workers were out of work for six months or more last year - the worst annual rate since 1983.

Also, a growing number of those long-term job seekers were people with lots of experience and education, raising disturbing questions about the loss of high-quality work during the nation's persistent "jobless recovery."

"What this shows," said EPI economist Sylvia Allegretto, "is not that young, uneducated people are doing better. It's that older, better-educated people are joining them [among the long-term unemployed]."

Economists expect the February unemployment report - due out today - to show more improvement in the job market. New and continuing unemployment claims have fallen during the month, and various business surveys point to increased hiring, said Mark Zandi, chief economist of Economy.com.

But even as the economy created 112,000 jobs in January, long-term unemployment rose slightly. Chronic unemployment has been particularly painful since December, when Congress allowed the federal extension of state unemployment benefits to expire.

The Center on Budget and Policy Priorities in Washington estimates that about 760,000 people have lost their benefits nationally since the federal program ended.

A lack of education remains the quickest way to join the ranks of the unemployed. People with a high school degree or less make up almost two-thirds of the nation's jobless and more than half of the long-term unemployed.

But since the economy began to sour in 2000, the number of older, college-educated people among the long-term unemployed has exploded.

The EPI study shows that the number of people with a college degree who have been out of work for at least six months grew 299 percent to 369,115 people by the end of last year.

The number of people 45 and older in the same situation grew 217.6 percent to 685,387 people.

The study also shows that college graduates make up a disproportionate share of the long-term unemployed. While grads constituted 15.3 percent of the unemployed, they represented 19.1 percent of the long-term unemployed.

Why this is happening remains a question, economists said. Outsourcing of white-collar jobs to places such as India is probably one explanation. More important is that companies are using new technology to boost productivity, eliminating white-collar work in greater numbers, Allegretto said.

It's also true that the jobs being created aren't as desirable as in the past. Temporary agencies, for instance, have done a lot of the hiring over the past year. But those jobs aren't necessarily good fits for people used to good pay and benefits.

Another EPI study of job quality shows that in 48 of the 50 states, jobs in higher-paying industries are shrinking, while jobs in lower-paying industries are growing. From the end of 2001 to the end of 2003, the industries losing jobs paid wages of $16.92 on average, while the industries gaining jobs paid an average wage of $14.65.

Hispanics' jobs, wages

In February, the Pew Hispanic Center released another surprising finding. According to the Labor Department's Current Population Survey, Hispanics grabbed 64 percent of the new jobs created last year. One reason is that they didn't pay as well. The Pew report showed that Hispanics - many of them new immigrants - flocked to construction sites as low interest rates pumped up homebuilding. That helped lower the unemployment rate among Hispanics but also put downward pressure on their wages.

John Narusis, 46, of suburban Crystal Lake, Ill., knows how hard it is to find a white-collar job these days. Thirteen months ago, he was a technical support worker for an aerospace company in Rockford. But after surviving several rounds of layoffs, he lost his job.

Since then, he has done part-time work, but after more than a year he has no real prospects and no health insurance.

Narusis was lucky in one respect. Because he worked for an aerospace company, he has received 39 additional weeks of federal unemployment benefits under a program that helps industries adversely effected by the Sept. 11 terror attacks. In January, he began a new benefit year and is eligible to receive another 26 weeks of state benefits.

Unfortunately, those new checks are $400 a month less than he had been getting, and his wife doesn't work.

Employees such as Narusis aren't likely to get much help from the federal government. A Senate measure to restart the federal unemployment extension program was attached to a gun liability bill. But last week it fell two votes short of the 60 needed to pass, despite support from 12 Republicans from high-unemployment states.

It's also unclear how much help to expect from the economy.

Like most economists, Zandi of Economy.com is hopeful that increased production and robust corporate earnings will soon lead to meaningful hiring. But as merger activity picks up around the country, he has a fresh worry.

"One question I have," Zandi said, "is, what businesses are going to do with all the cash they have [from increased earnings]? Could it be the case that they will use it to acquire and merge and try to consolidate to gain market share?"

History no help

Mergers often lead to layoffs, and that could put pressure on the job market again. Zandi said he has already received e-mail from employees of J.P. Morgan Chase & Co. looking for work in the wake of its recent merger with Chicago's Bank One.

History says that the jobs will appear, Zandi said, adding, "But history has not been a very reliable guide through this period."

The Chicago Tribune is a Tribune Publishing newspaper.

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