Tuesday, May 24, 2005

The New Profile of the Long-Term Unemployed

The New York Times
May 24, 2005
The New Profile of the Long-Term Unemployed

After three years of unemployment, Allen Gruenhut finally landed a job as director of human resources for a company in the stone business on Long Island. His age, 53, worked against him in his long hunt for work, he contends, and so did the six-figure salary he earned at his last job, in banking.

"They would not take me seriously at job interviews when I said I would be happy with a lower salary," Mr. Gruenhut said.

Jackie Ellenwood, 31, is still without a job. She worked for three travel agencies over 13 years, until her last job, in Allen Park, Mich., ended in a layoff nine months ago. The industry is shrinking in response to more Internet bookings and cutbacks in corporate travel so Ms. Ellenwood is looking for work elsewhere and studying to become a nurse, confident that health care will continue to expand in an aging America.

"I'm going to stick to my nursing courses," Ms. Ellenwood said, "even if I get a job."

The experiences of Mr. Gruenhut and Ms. Ellenwood help to explain why many of the nation's unemployed are still struggling to get back to work. Not since World War II has long-term joblessness - the percentage of the unemployed out of work for six months or more - been so high for so long after a recession has ended.

The current trouble falls most heavily on people trapped by the shifting sands of the economy. Today, the unemployment rate is relatively low at 5.2 percent and overall hiring has started to pick up again, particularly for younger workers coming out of college and professional schools. But the presence of middle-aged women and better educated white-collar workers among the long-term unemployed has increased.

"There are just not new jobs being created in the things these people did before," said Andrew Stettner, a policy analyst at the National Employment Law Project and co-author of a study of long-term unemployment. "We are firing fewer people than we did in 2001 and 2002, but we are not hiring many people either, and that cuts off the exit route out of unemployment."

At the same time, the incidence of long-term unemployment among the usual victims of earlier eras - less educated blue-collar workers who often lost their jobs in production cutbacks - has fallen.

Several factors seem to be contributing to the rise in long-term unemployment. The swelling cost of company-paid health insurance is "inducing business to be less aggressive in its hiring," said Mark Zandi, chief economist at Economy.com, a research group based outside Philadelphia.

The baby boomer bulge working its way through the labor force also plays a role; as this large group of workers ages it becomes harder for some who lose their jobs to find new work suited to their skills. And the bursting of the high-tech bubble stranded thousands of workers who are finding it difficult to shift quickly to other fields.

While job creation has accelerated lately, to an average of 240,000 additional jobs a month since February, it remains well below the pace of previous recoveries.

"It looks like employers are very hesitant about the future of the economy," said Lawrence F. Katz, a labor economist at Harvard. "It may be that we will fall into another weak economic period before we get a good recovery and really robust hiring."

After World War II, when traditional industries dominated the economy, the usual pattern was for long-term unemployment to surge during recessions and die away quickly as recoveries took hold. That changed during the early 1990's and is even more evident in the current recovery, which began in November 2001.

Rather than subside as growth resumed, long-term unemployment as a share of total joblessness continued to rise, according to the Bureau of Labor Statistics. It peaked 17 months ago at 23.3 percent and has only gradually tapered off since then, to 21.2 percent in April.

Structural changes in the economy and productivity improvements, reflecting the ability of companies to achieve higher output with fewer or the same number of workers, mean that even growing businesses no longer need to dip as much into the pool of displaced workers.

For example, Toyota Motors of North America, whose sales are rising more rapidly than other automakers in the United States, is holding back on hiring although its plants are operating flat-out. Its payroll, said Dennis Cuneo, a senior vice president, has grown by only 600 jobs this year - all of them at newly opened plants - to a total of just over 32,000 employees.

Existing factories continue on two shifts a day. Overtime and reconfigured work schedules help to squeeze out more production, without adding third shifts and the hiring that the additional shifts would require.

"We are reluctant to bring people on immediately," Mr. Cuneo said. "We are going to wait and see what we can still get from improvements in productivity. If the demand is sustained, there will come a point where you have to add a shift."

Other concerns play a role in the reluctance to hire, which in addition to driving up the long-term unemployment rate, drives down the number of people willing to actively seek a job and thus participate in the labor force. Sixty-six percent of the working age population was in the labor force in April, down from 66.7 percent at the start of the recovery. That is 1.6 million missing people, enough to raise the unemployment rate to 6.2 percent from its present 5.2 percent - if they all showed up.

Many of those who have stayed in the labor force, seeking work, may be people who were laid off for a long time before they were willing to accept a new job that pays less. Employers, on the other hand, are reluctant to hire those who once earned a higher salary. The fear is they will shift to better jobs at the first opportunity.

That is the story of Mr. Gruenhut, who earned a six-figure salary as senior vice president for human resources at Crédit Agricole Indosuez in New York, until his job there ended in 2002.

In subsequent job interviews, Mr. Gruenhut said: "They thought that even though I said I would be happy with a lower salary, I would be out the door as soon as there was an uptick in the job market. That happened at least a dozen times. I couldn't convince them."

Mr. Gruenhut, who has an M.B.A. from New York University and lives in East Meadow, spent 30 years in banking. But the "implosion in financial services," as he puts it, dried up jobs, forcing him to look elsewhere.

As he branched out, his age worked against him. "I did not get face time for plum jobs," he said. And when he did get interviews, his weight sometimes worked against him.

Finally, an acquaintance told him about an opening for a chief of human resources at the Innovative Companies, which is based in Hauppauge and sells marble and granite for construction. He clicked with the chief executive, Mr. Gruenhut said, and he went to work at a six-figure salary that was "considerably lower" than the one he had earned at Crédit Agricole. By that time, he had lost 46 pounds, to just under 200.

"If you think about it," Mr. Gruenhut said, "if you have age and over-weight and silver hair, which people were telling me to dye, those are blockades to landing the job that you want."

Ms. Ellenwood had none of these issues, nor Mr. Gruenhut's education. Right after graduating from high school, in 1992, she went to work for a travel agency, booking hotel reservations and airline tickets for corporate clients. By the time she lost her most recent job, at GET Travel last August, she was earning $670 a week. She spent months trying to land similar work at another agency without success.

"Until the spring of 2004," she said, "we were very busy. It was really stressful, call after call, and then the calls went down to pretty much nothing. We would sit in the office for an hour or two without the phone ringing."

Her unemployment benefits ran out after six months, but she is living in Dearborn with her fiancé, an employed engineer, and that has given her the means to pursue a nursing degree at a community college. While she studies, she hunts for work.

"My bottom line is that I don't want to work in fast food," she said. But even that vow could be broken, she added, if that is finally necessary "to pay the bills."