Posts Tagged "unemployment"

Expect More Moms to Sacrifice Careers

Woman working from home

Working mothers scrambled when the schools shut their doors last spring, but they found ways to cope. The 2020-21 school year may push many of them over the edge.

Child Care for men and womenLast spring, one in four women nationwide who’d either quit their jobs or were laid off blamed the difficulties of working after the schools closed or they lost child care to COVID-19, a Northeastern survey found.

Alicia Sasser Modestino is in the midst of repeating the survey but believes that the situation has only gotten harder for working mothers this fall.

“When you look down the barrel of a full school year of hybrid or remote learning,” the stopgap measures mothers deployed last spring “are not sustainable,” said Modestino, a mother of four and research director for Northeastern’s Dukakis Center for Urban and Regional Policy.

“If it’s not going to be Congress giving money for schools to reopen safely or the state opening child care centers, a parent is going to have to give up their job, and we know from history that it’s more likely to be women,” she said.

The impact of school closings on Millennials and Generation X can’t be overstated. In 75 of the 100 largest U.S. school districts, returning to school has meant students connecting to Zoom from their bedrooms or kitchen tables.

In the COVID-19 pandemic, a disproportionate share of women have been laid off, because they dominate face-to-face industries – nursing, retail, customer service – that are more vulnerable to closing. But something new is happening to mothers in this downturn. …Learn More

The Economics of Being Black in the U.S.

Unemployment DisparitiesThe COVID-19 recession demonstrates an axiom of economics. Black unemployment always exceeds the rate for whites, the spikes are higher in recessions, and, in a recovery, employment recovers more slowly.

A record number of Black Americans were employed in 2019. But when the economy seized up in the spring, their unemployment rate soared to 17 percent, before floating down to a still-high 12.1 percent in September.  Meanwhile, the white unemployment rate dropped in half, to 7 percent.

The much higher peaks in the unemployment rate for Blacks than whites and the slower recovery are baked into the economy.

This phenomenon occurred during the “jobless recovery” from the 2001 downturn. When the economy had finally restored all of the jobs lost in that recession, the Black jobless rate remained stubbornly higher.

And after the 2008-2009 recession, as the University of California, Berkeley’s Labor Center accurately predicted at the time, Black unemployment hovered at “catastrophic levels” longer than the white rate did.  This disparity is now the issue in the COVID-19 recession.

Geoffrey Sanzenbacher, a Boston College economist who writes a blog about inequality, gives three interrelated reasons for Black workers’ higher unemployment rates.

First, “The U.S. still has a tremendous amount of education inequality, and the unemployment rate is always higher for people with less education,” he wrote in an email. Despite the big strides by Black men and women to obtain college degrees, roughly 30 percent have degrees, compared with more than 40 percent of whites, he said.

Second, Black workers without degrees are vulnerable because they are more likely to earn an hourly wage. An hourly paycheck means that a company can cut costs by simply reducing or eliminating a worker’s hours. “It’s much easier to lay off hourly workers, whose employment is more flexible by nature, than salaried workers,” Sanzenbacher said. …Learn More

Pandemic Puts More Retirements at Risk

Worsening Retirement Outlook figureAmericans’ retirement outlook has gone from bleak to bleaker.

The unemployment caused by COVID-19 has pushed up the share of working-age households not able to afford their current standard of living in retirement from 50 percent to 55 percent, according to a new analysis by the Center for Retirement Research, which sponsors this blog.

The analysis updates a previous estimate, based on 2016 data, to include the harmful effects of surging unemployment. The researchers estimate that perhaps 30 percent of workers – far more than is reflected in the monthly jobless rate – could be affected by layoffs now and in the future. They did not factor in the recession’s impact on the housing and financial markets, which could make things worse.

Unemployment hurts retirement in a variety of ways. Laid-off workers’ paychecks vanish immediately, but they may also earn less in the next job. The depressed earnings, over months or years, reduce the money flowing into their 401(k)s, and the amount they’ll receive in pensions and future Social Security benefits. It may also force some to spend down savings that, had they not lost their jobs, would’ve been preserved for retirement.

Interestingly, the impact on low-income workers is mixed. In one way, they’re protected by Social Security’s progressive benefit formula, which will replace a higher percentage of their earnings as their lifetime earnings decline. But low-income workers have had more layoffs, which widens the gap in their retirement savings – between what they can save and what they should be saving – more than for higher-income people.

The 2020 recession will impact retirement “in a very different way” than the Great Recession, the researchers said. This time, “the destruction is occurring more through widespread unemployment and less through a collapse in the value of financial assets and housing.” However, the lessons of the previous recession can’t be dismissed either. …Learn More

Art of people at a job interview

Virus Complicates Boomers’ Job Searches

As laid-off baby boomers venture into the job market in the midst of the COVID-19 pandemic, they may sense it will be tough to find a position because, well, they’re too old.

New research indicates this suspicion is spot-on.

Discrimination is notoriously difficult to corroborate in academic studies. But researchers in Belgium, using a well-designed experiment conducted prior to the pandemic, found that company hiring managers working in 30 developed countries, including the United States, were much less likely to ask older job applicants to even come in for an interview.

The reason? They were perceived as having “lower technological skill, flexibility, and trainability levels,” the study concluded.

But there’s a big disconnect between this evidence of discrimination and a different report, based on a 2019 telephone survey, that employers view workers over age 55 as being at least – and sometimes more – productive than their younger colleagues. This survey also found that older workers are perceived more positively if the hiring manager is older. The findings provide some hope that, as the population ages, baby boomers who want to continue their careers may be able to do so.

However, even the authors of this study acknowledge two issues facing boomers. First, even when employers say they have positive perceptions of older workers, this posture “does not necessarily correspond with employer behavior.”

Second, given older workers’ underlying health conditions, COVID-19 is a wild card that could “adversely affect” their job prospects.

In any case, older job hunters will inevitably encounter some recruiters who will hold age against them. To overcome preconceived notions about older workers, the study of discriminatory recruiters provided some practical tips, based on the findings. …Learn More

Woman with mental health problems

Recessions Hit Depressed Workers Hard

Anyone who’s suffered through depression knows it can be difficult to get out of bed, much less find the energy to go to work. Mental illness has been on the rise, and depression and myriad other symptoms get in the way of being a productive employee.

So it’s not surprising that men and women with mental illness are much less likely to be employed than people who have no symptoms. But the problem gets worse in a recession.

In 2008, the first year of the Great Recession, the economy slowed sharply as 2.6 million workers lost their jobs. During that time, people who suffered from mental illness left the labor force at a much faster pace than everyone else, according to a new study from the Retirement and Disability Research Consortium.

The researchers compared average labor force participation, as reported in the National Health Interview Survey, for three periods. Two periods of consistent economic growth bracketed a period that included the onset of the Great Recession: 1997-1999, 2006-2008, and 2015-2017.

Labor force participation for people with no mental illness dipped less than 1 percent between the late 1990s and the period that included the recession. By 2015-2017, roughly three out of four of them were still in the labor force – only slightly below pre-recession levels.

Contrast this relative stability to large declines in activity for people with mental illness – the more severe the condition, the steeper the drop. Participation fell 17 percent among people with the most severe forms of mental illness between the late 1990s and the period that included the recession. By 2015-2017, only 38 percent of them remained in the labor force – well below pre-recession levels. …Learn More

Puzzle of heads

Disability Applications Spike in Recession

During the Great Recession, the record numbers of Americans who applied for disability included many people who lost their jobs – and it might happen again as the COVID-19 recession plays out.

A 2018 study estimated that 1 million people applied who would not have done so if there hadn’t been a recession. By October 2009, as the jobless rate was peaking, the additional applicants increased the total applications to the U.S. Social Security Administration by 16.5 percent.

The average age of these applicants was 53, and they tended to have impairments that were musculoskeletal or cognitive in nature. Because these impairments are less severe, they were more likely to be denied benefits, often resulting in an appeal.

In contrast, the people who would’ve sought disability benefits even in a strong economy tended to have serious medical conditions such as Crohn’s or chronic kidney disease that usually qualify them automatically under the disability program’s vetting system.

Ultimately, among the applicants who applied in response to the recession, 42 percent were awarded benefits, according to the study funded by the Social Security Administration and based on an analysis of the agency’s disability records.

When they did receive benefits, they were more often awarded on the basis of having a functional limitation and no transferable skills. As a result, many people who used to work were nevertheless approved for benefits, because their options for transferring their skills from their old job to a new job were limited.

Adding so many people to the disability system carried a steep price in terms of an increase in administrative and benefit costs. But the formerly productive workers also paid a price.

“Once people qualify” for disability benefits, the researchers said, “they rarely re-enter the labor force.” …Learn More

Cars in line at a food back in Austin Texas

Money, Virus Angst Combine for Low-Paid

There’s COVID-19 stress, and then there’s money stress. The combination of the two is becoming too much for many low-income workers to bear.

Two out of three people in families that earn less than $34,000 a year told the U.S. Census Bureau in April that they are “not able to control or stop” their worrying several days a week or more. The feelings are the polar opposite for families earning more than $150,000: two out of three of them said they are not worried at all.

The daily blast of pandemic news has pushed U.S. inequality into the spotlight, exposing the financial pressures low-income Americans are dealing with. Despite the unprecedented $3 trillion in financial assistance passed by Congress, the anxiety was probably a contributing factor in the protests that erupted in dozens of U.S. cities last week.

When governors shut down their economies to control the pandemic, the lowest-income workers – disproportionately African-American and Latino – had barely recovered from the previous recession. Yet nearly half of the increase in incomes for all U.S. families over the past decade has gone to the 1 percent of families with the highest earnings. One glaring example of this disparity is homeownership, which is usually the largest form of wealth by the time people reach retirement age. Homeownership rates across the board declined after the financial crisis, but African-American and Latino rates fell more and are still below 2007 levels.

Low-income workers are now bearing the brunt of the current downturn. Economists estimate the true U.S. unemployment rate could be as high as 20 percent. The layoffs have been concentrated among low-wage workers: nearly 40 percent of people living in households earning less than $40,000 have lost their jobs.

The fundamental challenge of surviving from day to day is evident in the miles-long lines of cars at some U.S. food banks. About a third of Americans are having problems paying for all kinds of essentials – rent, utilities, or food – but the number rises to almost half for African-Americans and Latinos, according to a Kaiser Family Foundation poll in mid-May. Children are being disproportionately impacted by rising food insecurity.

Spotty health care coverage is another layer of stress. Workers on the front lines in nursing homes, meat processing plants and grocery stores are more at risk of contracting COVID-19 but less likely to have health insurance from their employers. They may avoid seeing a doctor, even if they have symptoms, out of fear of being unable to afford the charges. …Learn More