The era of permanent unemployment

TheStar.com – opinion/editorialopinion
Published On Tue Aug 23 2011.   By Heather Mallick, Star Columnist

The unemployed? Forget about ’em.

As we fend off a double-dip recession, we tend to forget about the collateral human damage. This is a great mistake and not just because our own jobs could be the next to go.

There’s a difference between unemployment that is relatively brief and perhaps driven by one industry, and the permanent unemployment that results from recessions, particularly in this global economy. People look for work until they utterly despair and give up. These people are tracked in “labour force participation” numbers but not in the unemployment numbers sent out each month.

Their doom is secretive, almost subterranean. “History suggests it is perhaps society’s most noxious ill,” writes Don Peck, U.S. author of Pinched, a study of what three recessions have done to the U.S. in the past 100 or so years.

Canadians could learn from Peck’s elegant little study of economic catastrophe. But then so could Americans and they don’t, which is their tragedy.

Peck looks at the U.S. depression of 1893, the climbdown from a Gilded Age that resembles this one, “a time of technological revolution, rapid global integration, vast economic change, rising inequality (and) market crashes.” Minus the horse-and-buggies, it could be us now. Populism was on the rise, along with anti-immigrant sentiment, racism and xenophobia.

Then came the Great Depression, following an alleged 1920s boom that didn’t reach many. The Depression lasted far longer than is generally thought, with the economy not truly picking up until 1941 when the U.S. got around to fighting a world war.

Peck’s third case study is the 1970s, with two recessions, in 1973 and 1978. They do not generally mirror the 2009 recession but the stagnation they produced, Peck writes, caused social and political changes that we are still living with now. For one thing, escaping the pain in the 1980s made us giddy with false prosperity. Enter the Yuppie, the credit boom, the housing bubble, enter once again not learning from the mistakes of the past. Peck’s thesis is that each recession changed society. Pain followed by elation is easy to track. But what about the fear of destitution that is scored into the brain of every human who lived it? No one — except for the very rich and there are more of them now — comes through a recession unscathed.

Young people’s life chances were badly damaged in the run-up to the 2009 recession and they will never be repaired. The young are cautious, frightened and cynical now. Like survivors of the Great Depression, they may always feel this way.

Permanent unemployment (as North American manufacturing erodes, never to repair itself) is known in economic terms as “hysteresis.” It kills health, marriages, stability and parents’ ability to send a child to university. It destroys cities and neighbourhoods, and sends young people into the workplace with mortgage-level debt. Those children, raised with self-esteem, will lose it in the most painful way possible.

If the young are in shock, look at the older men who are the majority in the Tea Party movement or in “Ford Nation.” Men still make more money than women, on average, but in a recession women do better because they accept low-wage jobs in the service sector and men tend not to, and remain jobless.

Relations between the sexes sour, between everyone. Status anxiety rules. So we lash out — against workers with pensions, for instance — and vote against our own long-term interests. Irrational thinking prevails.

I will leave you with Peck’s story of a senior financial analyst laid off at 59. After a year of humiliation, he found a part-time cashier’s job at Wal-Mart for $8.50 (U.S.) an hour. He rang up purchases for some neighbours recently, he said, people who had not lost jobs. “They didn’t greet him, and he didn’t say anything,” Peck wrote.

The man looked down at the table, paused, and then looked up again. “I know they knew me,” he said. “I’ve been in their home.” They had cut him dead.

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