In a matter of weeks, the economic hit from the coronavirus has wiped out a decade’s worth of employment gains. On Thursday, a report showed U.S. jobless claims rose by another 4.4 million, bringing the five-week total to more than 26 million. That’s the steepest downturn for the American labor market since the Great Depression. More troubling for any long-term recovery, however, may be those who keep their jobs but watch their careers stall. Here’s where a lesson from 2008 might be useful.
For many millennials, the Great Recession wasn’t a crisis of unemployment so much as job stagnation and underemployment – putting in fewer hours than desired, or not tapping one’s full range of skills and productivity. I lived my own version of this, having started my first real job a month after the collapse of Lehman Brothers Holdings. Grateful simply to be employed, I looked past the unglamorous task of writing earnings headlines from press releases, which are now cranked out by algorithms. I was bringing in a mid-five-figure salary and felt like a millionaire.
My gratitude slowly calcified into frustration as I found myself stuck at the same desk for four years. I wasn’t alone. For every story like mine there was a sales representative too discouraged to apply for that regional-manager role, a part-time retail clerk who couldn’t get a regular weekday shift, or even that sorry banking analyst who couldn’t progress beyond plugging data into Excel. All this has a cost: While the U.S. shed more than
The impact from the coronavirus will be even worse. The International Labour Organization expects
This might seem like a brisk turn of events. As recently as February, the U.S. recorded its lowest unemployment rate in half a century. Dig one level deeper, though, and you’ll see why that 3.5% doesn’t tell the full story. A more holistic gauge of labor-market health may be the
If there’s one thing to watch, it’s the gap between these two numbers, says Torsten Slok, chief economist at Deutsche Bank Securities. That could indicate the strength of any recovery. Keep in mind, though, even the U-6 category doesn't capture job stagnation among the fully employed.
The idea that underemployment is underappreciated isn’t new. In 2019,
Consider Hank, the part-time worker who’s too downbeat to apply to a full-time gig. He flicks on the news and sees encouraging headlines about the job market. Stirred to dust off his resume, he feels lucky to land an offer relatively quickly. But because he’s been operating at half-speed for so long, Hank has very little bargaining power when it comes to salary negotiations. So while it’s heartening that he’s been added to the workforce, Hank’s not contributing much to higher average wages.
Other research shows just how pernicious working below potential can be. In 2014, Tim Slack of Louisiana State University and Leif Jensen of Pennsylvania State University pointed out that
The knee-jerk policy response has been to ramp up unemployment benefits,
Yet unemployment offices around the country are so overwhelmed with requests – and
For the unemployed, the answer is bigger stimulus checks. The $1,200 handout many Americans will receive look generous at first; if you consider a median weekly wage of roughly $900, however, that outlay buys little more than a week or two for many households, Slok notes. For the underemployed, who have the benefit of time, a simple solution would be to make job-search expenses tax deductible again –
There are many eulogies floating around for millennials these days. Now sandwiched between two economic calamities, we’ve racked up a lot of debt, saved very little and flooded into informal jobs with few worker protections, such as paid sick leave and retirement benefits. The Atlantic is calling us the
By accident of birth, I had access to an education that’s opened doors — and I've certainly managed to find my way. But even with this golden passport, it took several years and moving across continents to get where I wanted. Millions of other Americans aren’t so lucky.