Millions shut out of job market
By Richard Webner Fri, Dec 12, 2014 @ 3:19 pm | updated Sat, Dec 13, 2014 @ 10:04 am
After losing her job as a secretary at Stein Mart in 2009, Alicia Bird looked for similar positions at companies like CSX and Baptist Medical Center. But she didn’t have any luck.
So she lowered her ambitions, applying to Publix, Winn-Dixie and Wal-Mart. Still, no offers, except a job cleaning bathrooms at Save-A-Lot, which her husband wouldn’t let her take.
As her unemployment stretched into months and years, she felt depressed, confused and angry, even with the support she got from her church and her dozens of nieces and nephews. Finally, she gave up.
“Why is it that after five years of looking, nobody wants me?” said Bird, of Jacksonville, who is 63. “It just doesn’t make sense.”
In the past 15 years, millions of Americans have left the workforce, causing the labor force participation rate — the share of American adults who either have a job or are looking for one — to fall from 67.1 percent in 2000 to 62.8 percent in November, according to data from the U.S. Bureau of Labor Statistics.
Some, like Bird, left out of frustration from not being able to find a job. Others left for personal reasons, including millions of Baby Boomers entering retirement.
The participation rate has been sliding since hitting a peak in the late ‘90s, when a flush economy sent businesses scrambling for workers. The decline steepened during the recession and the sluggish recovery. In a harsh job market, many Americans gave up their job searches after months or years of frustration, deciding instead to go to school, stay at home with their children or retire early.
“I’m not the type to get discouraged rapidly,” said Mac Hines, of Jacksonville, a former truck parts salesman who recently retired rather than continue his five-year job search. “I’m educated enough to do arithmetic. I know if it’s a waste of gas, why bother.”
The economy is improving — the unemployment rate has split nearly in half since the recession, and more jobs have been created so far in 2014 than in any year since 1999. But the labor force participation rate has remained stubbornly low. January’s rate of 62.5 percent was the lowest since April 1978.
In Florida, the participation rate has been lower than the national rate for decades, largely due to the state’s relatively old population, said Paul Mason, a professor at the Coggin College of Business at the University of North Florida.
Since 2007, Florida’s rate has dropped more sharply than the national rate, from 64.2 percent to 60.2 percent. The brutal impact of the housing crash might have driven Florida’s steep decline during those years, Mason said.
The shrinking portion of Americans in the labor force will have wide implications for the economy, experts say. A smaller labor force means slower economic growth and fewer contributors to programs like Social Security and Medicaid.
“When you have fewer people in the economy but you still need to feed everybody, clothe everybody, it gets harder and harder,” said Tara Sinclair, an associate professor of economics at George Washington University. “We’ve been talking about it for a long time, thinking about it for a long time, and it’s finally come, but I don’t think we’re prepared for it.”
IN RECESSION’S WAKE
The years before the housing crisis hit in 2007 were a time of optimism for Robert, of Jacksonville, who asked that his last name not be used out of concern it would hurt his family’s social standing. He owned a home inspection business in North Carolina, but it collapsed along with the housing market. He and his wife moved to Jacksonville, where she found an office job.
Over the next four years, Robert sent about a hundred resumes and registered with several employment websites. He got a few temporary jobs, helping with the 2010 U.S. Census and the clean-up after Tropical Storm Fay, but nothing permanent. Meanwhile, he struggled with loneliness, boredom and frustration. His lack of work threatened his sense of self-worth.
“They say that you’re more than your job, but in reality most people are their jobs,” Robert said. “It diminishes your whole picture of who you are.”
Finally, in 2010, he decided to stop looking and collect Social Security benefits early, even though that took a bite out of his monthly check.
During the recession, the number of workers like Robert who left the labor force out of discouragement skyrocketed — from 369,000 in 2007 to to 1.2 million in 2010, according to BLS data.
Since 2010, the number of discouraged workers has been on a shaky decline. So far this year, the number of Americans who have left the labor force out of discouragement has dropped from 837,000 to 762,000.
In some ways, things have become more difficult for the long-term unemployed as the economy has improved, said Candace Moody, who has worked at the CareerSource Northeast Florida employment agency for 17 years. They face more of a stigma, she said. During the worst of the recession, being unemployed for a long time wasn’t uncommon, but today, large gaps in applicants’ resumes stand out more.
“They start getting depressed, and it starts to show,” Moody said. “That can make it more difficult when they get into an interview situation.”
Many unemployed diminish their aspirations, looking for jobs with lower salaries than what they made before, Moody said. Employers then won’t hire them because of worries that they’ll leave the jobs when other opportunities arise.
LABOR FORCE IN FLUX
In historical terms, the recent decline in the participation rate is an anomaly. The percentage of Americans in the labor force was rising for most of the last century. In large part, that was due to a surge of women seeking careers: Since 1948, the percentage of women in the labor force has risen from 32.7 percent to 57.2 percent, according to BLS data.
The swollen Baby Boomer generation also raised the participation rate when it entered the workforce in the ‘60s and ‘70s, experts say. Forty years later, Baby Boomers are retiring. That’s responsible for about a third of the recent decline, said Jesse Rothstein, an associate professor of public policy and economics at the University of California, Berkeley.
Another factor in the decline is the shrinking share of young people in the workforce.
In the past 30 years, the percentage of 16- to 24-year-olds in the workforce has declined from 67.7 percent to 55 percent. That’s because young people are more likely to go to college these days, Sinclair said. They’re also less likely to take part-time jobs while they’re in college, opting instead to beef up their resumes with activities and internships.
Even while many retire, Baby Boomers help keep the participation rate up by staying in the workforce longer than previous generations. In 2013, 64.4 percent of 55- to 64-year-olds were in the labor force, up from 54.2 percent in 1984.
Some Baby Boomers are sticking around to repair the damage that the recession did to their bank accounts, Rothstein said. They also tend to be passionate about their careers.
That’s the case for Jacqueline Furlow, 67, who retired from her 49-year career in human resources in February. She enjoys having more free time, which allows her to take a leisurely walk every morning, a pleasure she used to limit to weekends. But she misses the stimulation and socialization of work. In a year or so, after she’s relaxed a bit, she plans to look for a part-time job.
“When you work for so long, for so many years, you reach a point that once you retire, you’re like, ‘What do I do now?’” said Furlow, of the west side. “I just think the mind becomes a little stale when you don’t exercise it.”
A NEW NORMALOb
Economists debate how much of the participation rate’s decline is due to the poor economy, and how much to demographic changes, Sinclair said. The amount caused by the recession is important: If the poor economy has caused the labor force to shrink, that means that the labor force could expand again when the economy improves.
For now, the economic recovery is luring some workers back into the labor force, offsetting the decline caused by retiring Baby Boomers. That’s helped send the labor force participation rate on a slow climb so far this year. Since January, the rate has risen slightly, from 62.5 percent to 62.8 percent.
But that trend might not last.
In a report on the labor market released in August, the Congressional Budget Office estimated the glut of discouraged workers will “largely disappear” over the next few years as the economy improves. But demographic trends will cause an overall decline by about half a percent by 2017, the report predicted. Next year could be a tipping point, Sinclair said, when the Baby Boomer stampede causes the labor force participation rate to resume its decline.
For his part, Robert still hopes he’ll work again. While he isn’t actively looking for a job, he’s heartened by signs of recovery in the economy. He might step back into the labor force soon.
He and his wife have had to cut back on food and entertainment, and their retirement plans have taken a hit. But unemployment has brought some benefits. It’s taught him to appreciate things more, he said.
“My attitude toward a lot of things has changed — toward people who collect food stamps and people who are unemployed,” he said. “When you’re on the other side, you get a lot of empathy for what’s going on.”