How many Americans will never work again? Perhaps a lot. A close look at the Bureau of Labor Statistics’ Current Population Survey raises some alarming questions about the prospects of significant parts of the American population.
Thirteen percent of Americans twenty-five years and over without a high school diploma were unemployed in June (down from a peak of 17.9 percent in February, but much of that decline was due to a fall in the labor force participation rate from 62.4 percent in February to 61.4 percent in June). Ten percent of workers with only a high school diploma, were unemployed in June. Workers with a Bachelor’s degree, by contrast, had an unemployment rate of only 4.5 percent that month.
For African Americans over twenty years of age, the official unemployment rate in June stood at 17 percent. Most striking, only 58 percent of African-American men over twenty are employed, compared to 67.7 percent in 2000. For white Americans over twenty, the employment-population ratio fell from 64.9 percent in 2002 to 60.2 percent in 2009, a far smaller decline. There is almost no decline for Hispanics; the employment-population ratio stayed around 68 percent between 2000 and 2009.
The data suggest that black men with a high school education or less are dropping through the cracks in the economy. Adjusting for the decline in the employment-population ratio, the true unemployment rate for African-American men probably stands close to 30 percent. That is a frightening number.
Another striking data point is the collapse of employment for labor-force entrants aged sixteen to nineteen years. Jobseekers of this age have a low educational level and seek unskilled positions. In 2000, 45 percent of this population was in the labor force, but by 2009 the level had dropped almost to 28.4 percent. While unskilled workers of all ages are having difficulty finding work, young unskilled workers are finding it even harder.
Why is this significant? Unemployment for African Americans and those with less education has always been higher than for others, but most were eventually employed. The economic crisis has only magnified the differences. That would be bad enough. As matters stand, many of these workers may never find a steady job again.
As of June, 6.4 million Americans were on unemployment for more than 27 weeks, and the average duration of unemployment doubled from sixteen weeks in early 2008 to 32 weeks in June. These figures are, for the workers we are discussing, only going to get worse. Americans without educational qualifications are suffering levels of unemployment on the scale of the Great Depression, and for them that Depression may never end.
The sectors of the economy in which workers with less educational attainment were likely to find employment will continue to shrink. Foremost among these is home construction, where recovery may be decades away. By some estimates the US faces a 40 percent oversupply of large lot family homes by 2020, as the great retirement wave of the Baby Boomers leaves empty nesters with larger homes than they require.
Another sector is state and municipal employment. A significant proportion of job losses during the next several years will include unskilled workers employed by local governments.
Why should the discrepancy between white college-educated workers and others be so great? The world economy has changed, permanently. America once enjoyed a monopoly as a destination for capital and labor. The world’s savings poured into America during the 1990s and 2000s, contributing among other things to the homebuilding boom that employed many of the unskilled.
The fall of communism in 1989 and the incorporation of many countries from what we used to call the Third World into the global economy have eroded that monopoly. It has sharply reduced the number of jobs in manufacturing, which now employs only 15 percent of the workforce, and no longer offer unskilled labor an entry-point into the labor force. Again, the end of the housing boom and the decline in public employment in the wake of the financial crisis have also closed off other sources of employment.
There are three ways the situation could evolve, and two of them are bad. The first is that the American underclass might expand drastically, with attendant social and political problems. The second is that we will revert to methods last used during the Great Depression, when the Civilian Conservation Corps employed a tenth of America’s young men, encouraging the growth of government as an employer, even though governments are bad at providing jobs and the economy cannot sustain such programs.
The third way is the restoration of an economic regime that promotes entrepreneurship. The employment situation will not improve until small businesses begin to hire. In America’s creative-destruction economy, jobs lost by big companies usually are lost forever; they are replaced by jobs created by startups. Startups created two-thirds of all new jobs in the U.S. during the past three decades. This is the only real hope for the unskilled — but small business remains dead in the water.
We simply don’t know whether the next wave of entrepreneurship—if we are able to launch it—will absorb the millions of young, less-educated men who seem lost to economic activity. I fear that something like Roosevelt’s CCC may be required, despite my conservative’s aversion to government spending. There is, after all, a good deal of infrastructure to be repaired.
David P. Goldman is a senior editor of First Things and author of the Spengler blog as well as the Spengler column in the Asia Times.
Bureau of Labor Statistics’ Current Population Survey
David P. Goldman, The Long Term Employment Bust
David P. Goldman, Clinton as Cargo Cult
Spengler, Bah, Humbug, and Labor Statistics