1 Running head: THE UNEMPLOYMENT PARADIGM

The Unemployment Paradigm Savanna Chiang Jason Lee Miller English 105-09 Purdue University Calumet

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Unemployment across the nation and locally in Northwest Indiana has been staggering. As recently as 2007, the unemployment rate in Northwest Indiana was at a healthy 4.9% (Northern Indiana Data Plus, 2012). Local newspapers like the "Northwest Indiana Times" were reporting at the beginning of the economic crisis, that the area was immune to the effects of the housing bubble, and therefore would be left untouched. How untrue those predictions turned to be. By the end of fiscal year 2008 unemployment in Northwest Indiana had spiked up to 5.9% with no end in sight (Northern Indiana Data Plus, 2012). In 2009 Northwest Indiana unemployment almost doubled to an astonishing 10.8% (Northern Indiana Data Plus, 2012). The employment crisis never recovered, and yet still hovers at around a year to date average of 9.1%, well above the national average (Northern Indiana Data Plus, 2012). The community has a long way to go, to return to the healthier 4.9% benchmark enjoyed in 2007. Shierholz (2012) reports
that the number of currently unemployed in the U.S. outweighs the number of job openings in every sector. Despite mild employment improvement, the job seeker ratio remains stubbornly high. The job seeker ratio is the amount of employed workers to job openings. According to Shierholz who works for the Economic Policy Institute, in October 2012, there were 3.5 unemployed people for every singular job opening (3.5:1). Simply put, there aren't enough jobs for Americans who want them and as Shierholz notes, this scenario has played out since at least 2008. Unemployment is determined with a survey conducted by the Bureau of Labor Statistics (BLS). This survey is known as the Current Population Survey (CPS), and it has been conducted every month since 1940 (Bureau of Labor Statistics, 2009). The BLS says they contact 60,000 Americans and interviews them with non-specific questions about their employment status. After several carefully

3 THE UNEMPLOYMENT PARADIGM worded questions a computer determines if someone is unemployed or not. Generally according to BLS, a person is considered unemployed if they are " jobless, looking for jobs, and available for work"

(Bureau of Labor Statistics, p. 4). The methodologies used to produce the unemployment number is not without its detractors, with some controversy existing among different political factions. The BLS in 1994 changed their methodology in counting the unemployed to not count "discouraged workers" and the "marginally attached." According to BLS discouraged workers are those who would like to work and have searched in the past twelve months, but were not counted because they had not searched in the last four weeks (Bureau of Labor Statistics, 2009). Therefore, if a person hasn't looked for a job in the past four weeks, they're deemed discouraged and have left the labor force. Although still highly controversial, the unemployment number is still an important indicator of the economy. A brief history of unemployment shows that while spikes in employment are normal, the current economic situation is anomalous. One has to go back to the early 80's in 1982, under President Reagan, to find unemployment numbers similar to the ones found today. At that time it was the worst recession since the Great Depression had plagued the 1930's (PBS, para 6). The early 80's recession while deep and bad, wouldn't be as long and severe as the coming recession of 2008 to present. In 1982 the unemployment rate was 9.7% and with nine million people without work (United States Unemployment Rate, 2010). Going back to the Great Depression, the unemployment rate went from an impressive 4.2% in unemployment rate and skyrocketed after the 1929 Stock Market crash to 23.6% just a few years later in 1932 (Nerozzi, 2011). The economy recovered in the early 40's where the U.S. hit its best employment numbers in history at the unheard of rate of 1.2% unemployment in 1944 (United States Unemployment Rate, 2010).

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Outside of those three events, unemployment has stayed relatively stable, with a few occasional hiccups here and there. Current unemployment remains stubbornly high, even though the U.S. is not technically considered in a recession; the unemployment rate has remained above 7.5% since 2008. The unemployment for this most recent crisis reached its peak in October, 2009 at 10.2% unemployment and very slowly trended down to its current rate of 7.8% unemployment as of September, 2012 (Google Public Data, 2012). Most vulnerable to the volatile swings in unemployment are minorities and youth. Current unemployment rates for youth are as follows: general youth unemployment rates are 11.8%, African American youth unemployment is a staggering 21.0%, Hispanic youth unemployment is 12.1%, and women youth unemployment is 11.6 percent - all much higher than the national average (SOP newsire2, 2012). Youth is defined as those who're between the ages of 18-29 years old (SOP newsire2, 2012). According to Student Operated Press (SOP), "89% of young people ages 18-29 say the current state of the economy is impacting their day-to-day lives", and that, "[just] 38% believe that today`s political leaders reflect the interests of young Americans." With unemployment numbers still exceedingly high across the board for our young people, the young remain skeptical and about their futures and their leaders. The disparity between African Americans should be of great concern. White peak unemployment reached 9.3% in 2009, Hispanic peak unemployment reached 13.1% in 2010, and African American peak unemployment reached 16.7% (United States Department of Labor, 2011). Even before the economic crisis, African Americans were relegated to unacceptably high levels of unemployment, at around 8.5% (United States Department of Labor, 2011). Even during times of measured good employment, there are demographics in society who remain at a

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distinct disadvantage in society. As for the specific cause of the current economic crisis economist Nuriel Roubini says it was "largely the result of unregulated lending, the accumulation of toxic assets in the housing sector, and excessive debt-driven consumer spending" (Momjian & Munroe, 2011). Obtaining full time employment has become an ever increasing problem. According to the coordinator of Purdue University Calumet's Amy Staffeldt, if a person is looking for full time employment, they recommend turning in forty resumes a week (A. Staffeldt, personal communication, October 29, 2012). How pragmatic this is approach is for the truly unemployed, with rising gas prices, rising food costs etc, raises some questions. Those with strong social support might find this do-able, but those scraping to get by will find this extremely difficult. To add insult to injury, today's youth who put the effort to go through school aren't getting the payoff they likely expected. The number of unemployed college grads has some experts scratching their heads, as Jordan Weissmann, a writer for the Atlantic observes, "these numbers are hard to fathom" (Weismann, 2012). That's because, as report released in April 2012 noted, 53% of recent college grads were either jobless or underemployed, which is in stark contrast to an older voting populace who enjoy 4.2% unemployment (Weissmann, 2012). Even more alarming these numbers are as Weissmann puts it, "[by] those measures, college grads are
actually faring worse in the job market than the overall youth population" (para 5). Unfortunately as Weismann details:

[The] number of Americans under the age of 25 with at least a bachelor's degree has grown 38 percent since 2000. Not nearly enough jobs have been created to accommodate them, which has resulted in falling wages for young college graduates in the past decade, as well as the employment problems we're now seeing. (para 8).

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This is a startling scenario, one that even suggests that education has unfortunately been devaluated. Until more jobs flood the country, a portion of the educated pie will be forced into low-paying, skill-less jobs. Skill oriented degrees in technical fields, like nursing, or accounting will continue to be in demand, while the liberal arts will be less useful; even associates degrees that zero-in on specific skilled labor, have better job prospects and pay (Weissmann, 2012). Adding insult to injury, uneducated workers will feel more pressured by the extreme competition in the marketplace, to themselves get a degree, which will cause further degree devaluation. This unfortunate scenario has led to a growing trend of graduate degree holders in similar predicaments. The number of graduate degree holders who've had to rely on government assistance, has tripled in three years (NPR Staff, 2012). Education has taken a brutal hit across the country, causing Universities to rely on what is known as "contingent faculty", people who work under contract. This allows the Universities to hire highly educated people who're desperate for jobs temporarily, and without having to offer health insurance (NPR Staff, 2012). There are other complex factors that cause people to be unemployed. Aside from the obvious factor of lack of education, or even laziness, issues like mental health are often ignored, drug addiction, criminal backgrounds, and even during a rough economy some employers insist on identifying credit scores as an indicator of employability. Another issue that has been occurring, is that people are more hesitant to retire, or haven't been able to save up enough which displaces work for the generation who would have stepped forward into those jobs. Job scarcity creates a rippling effect, which creates hyper-competition. In bad economies, workers also lose leverage over their employers. Employers know that there are large numbers of unemployed people and large quantities of qualified people to replace jobs. That enables them to demand things from their employees, they wouldn't otherwise be able to demand in a healthy economy.

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More, specifically employees have large amounts of leverage over wages, hours, and benefits. In desperate times, workers will settle for worse working conditions, and this is something employees readily take advantage of. Another complex issue that some people have pointed to as a possible agitator to employment are our free trade policies. As millions of manufacturing jobs have shifted overseas because of trade policies, many Americans yearn to return to more protectionist policies. Economic insecurity can lead to many detrimental effects on a person and society. Research has consistently shown that "declining resources increase stress and negative outcomes due to the risk of unemployment and job insecurity (Momjian & Munroe, 2011, p. 196). According to Momjian et al, likelihood of drug use goes up if someone is fired for anything than job performance (Momjian et al, 2011). However, strong social buffers, or connections with friends, family, or other networks has had positive effects that can counterbalance these strong negative circumstances, although racial minorities tend to lack the social capital needed to overcome such obstacles (Momjian et al, 2011). According to their research "individuals with strong social support networks are better equipped to cope with major life changes (Momjian et al, p. 198). Stronger social forces would likely mean stronger support in help with an array of areas, including job searches, a place to go if loss of home, help with living expenses, etc. Having this kind of help understandably reduces the stress and consequences that appear to those without such helpful social constructs. If that social link is missing, having to deal with these immense life issues alone complicates things many-fold. For instance, instead of moving with a family or friend when they lose a home, they have to resort moving to the street, a car, or a homeless shelter, if room is available. Lack of a strong social network can also mean no support for other things like food, which can lead to acts of desperation, including crime. This heavy

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burden can lead to significant mental breakdown, where heavy drug use is sought to deal with the pain. In 2011 Butterworth, Leach, Pirkis, Kelaher determined that: [Mental] health predicted subsequent unemployment. On average, men and women who experienced symptoms of common mental disorders spent greater time over the next 4 years unemployed than those with better mental health but there were sex differences in the nature of this effect. These findings highlight the importance of mental health in the design and delivery of employment and welfare policy. (p. 1013) As the research suggests, mental health plays a large role in a person's ability to remain in the workforce. There are many with mental health issues who remain as long as they can in the workforce, until they're forced out of their positions, leaving them little alternatives. Lack of health insurance only ensures the individual remains mentally ill and unable to work. The significance of mental health as a factor in unemployment, cannot be stated strongly enough. Unemployment has a multitude of causes and effects, some of which are self-inflicted, and some of which people have little to no control over. From predatory banking, governmental regulations (or the lack thereof), bad personal choices, mental health problems, economic phenomenon, to bad luck, there numerous reasons for unemployment causation. It is only when many people become employed at once, in many places, that we can generalize its causes. Working together to find common ground on solutions to improve the country's economic situation will ensure a future for our children and grandchildren.

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Unemployment as related to different social issues (like the drug debate) can hinge on moralist perspectives as well.

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References
Bureau of Labor Statistics. (2009). How the Government Measures Unemployment. Retrieved from http://www.bls.gov/cps/cps_htgm.pdf Butterworth, P., Leach, L., Pirkis, J., Kelaher, M. (2012). Poor mental health influences risk and duration of unemployment: a prospective study. Social Psychiatry Psychiatr Epidemiol, 47, 1013-1021. doi: 10.1007/s00127-011-0409-1 Google Public Data [Chart]. (2012). Retrieved from Google's website: http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&i dim=country:US&fdim_y=seasonality:S&dl=en&hl=en&q=unemployment Momjian, V., & Munroe, K. (2011). Economic Insecurity, Mental Health, and the Economic Crisis in New York City. The Western Journal of Black Studies, 35, 196-207. Retrieved from http://lib-

proxy.purduecal.edu:2048/login?url=http://search.ebscohost.com/login.aspx?direct=true &db=aph&AN=67021122&site=ehost-live Nerozzi, S. (2011). From the Great Depression to Bretton Woods: Jacob Viner and international monetary stabilization (1930-1945). European Journal of the History of Economic Thought, 18:1, 55-84. Retrieved from http://libproxy.purduecal.edu:2048/login?url=http://search.ebscohost.com/login.aspx?direct=true &db=aph&AN=57867331&site=ehost-live Northern Indiana Data Plus. (2012). Historical Labor Force & Unemployment Date for Northwest Indiana Region. Retrieved from http://www.nidataplus.com/lfeRg1.htm NPR Staff. (2012, May 15). Why So Many Ph.D.s Are On Food Stamps. National Public Radio. Retrieved from: http://www.npr.org

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PBS. (n.d.). The 1982 Recession. Public Broadcast Station. Retrieved from: http://www.pbs.org Shierholz, H. (2012, October 10). Job-seekers ratio down slightly in August, and likely dropped further in September [Supplemental material]. Economic Policy Institute. Retrieved from: http://www.epi.org SOP newswire. (2012, October 27). Unemployment Numbers: What Signal Will it Send to Young Adult Voters Prior to Election? [Supplemental material]. The Student Operated Press. Retrieved from: http://www.thesop.org U.S. Department of Labor. (2012). The African American Labor Force in the Recovery. Retrieved from: http://www.dol.gov/_sec/media/reports/BlackLaborForce/BlackLaborForce.pdf United States Unemployment Rate. (2010). A look at the U.S. unemployment rate for selected years from 1920-2010 [Supplemental material]. Info Please. Retrieved from: http://www.infoplease.com/ipa/A0104719.html Weissmann, J. (2012, April 23). 53% of Recent College Grads Are Jobless or UnderemployedHow? the Atlantic. Retrieved from http://www.theatlantic.com