Unemployment woes hit hard for displaced workers, Labor Dept. study shows

Mark Lennihan/AP - In this Aug. 2, 2012 photo, ironworker Stephen MacGray cuts a steel brace at the World Trade Center construction site, in New York. The economy has added an average of 151,000 jobs a month this year, roughly the same as last year's pace. That's not enough to satisfy the 12.8 million Americans who are unemployed.

Many workers are nervous about their livelihoods despite the economic recovery — and for good reason, it turns out.

Among those workers who lost a good job because of the struggling economy over the past three years, roughly one in four found a job that pays as well, according to data released Friday by the Labor Department.

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Finding work after job loss
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Finding work after job loss

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The others remained unemployed, stopped looking for work or accepted jobs at lower wages.

“This data is telling a story of unemployment inflicting long-term damage for a lot of people,” said Michael Mandel, an economist at the Progressive Policy Institute, a centrist think tank. “This won’t turn around until wages overall start rising — and so far, we haven’t seen any strong signs of that.”

The biennial survey of “displaced workers” is one of the government’s most detailed reports of the unemployed.

The report focuses primarily on steady workers who were economically displaced — that is, people who had held a job for at least three years and lost it because a plant closed, there was insufficient demand or the position was cut.

The 6.1 million such workers who lost their jobs between 2009 and 2011 were surveyed in January of this year. Of them, roughly 30 percent took jobs that paid less, about 27 percent remained unemployed at the time of the survey and 17 percent stopped looking for work.

Of those who accepted jobs with pay cuts, most lost 20 percent or more from their previous wages. This analysis probably underestimates the loss of wages because it assumes that displaced workers who reported taking part-time work or being self-employed faced the same wage reduction as those who found full-time employment.

“Things are certainly better than they were two years ago, but we’re not where we ought to be,” said Henry Farber, an economist at Princeton University who uses the survey in his research.

Indeed, the downward pressure on incomes extends well beyond those who have suffered a spell of unemployment.

According to a report released this week, incomes have dropped more since the beginning of the recovery than they did during the recession.

Adjusted for inflation, overall median household income fell 4.8 percent over the three-year period that ended in June, according to the report issued by Sentier Research, a firm headed by two former Census Bureau officials.

The new survey from the Labor Department does, however, show signs the economy has improved.

The number of workers being displaced from jobs they had held for three years or more has dropped since the recession ended in June 2009 — from 2.5 million in 2009 to 1.8 million in 2010 and 2011.

Moreover, a larger percentage of those displaced workers are finding jobs.

In the last such survey, which covered 2007 to 2009, only 49 percent of those workers had been reemployed by the time of the survey, a historic low.

This time around, the number of reemployed has risen to 56 percent — better, but still the second-lowest level since the survey began providing comparable figures in 1994.

Normal levels are about 65 percent or more.

The economy now is “a little bit better,” said Heidi Shierholz, an economist at the Economic Policy Institute. “But if you lost your job, there just wasn’t that much available.”

The difficulties, moreover, have been spread unevenly across the economy and across age groups.

The typical older worker who was displaced spent more time without work — 12 weeks or more for workers older than 45, compared with about eight weeks for younger workers.

Similarly, various industries offered widely different job prospects. Only about a third of workers who had lost jobs in real estate had found new jobs, according to the survey. By contrast, more than 70 percent of telecommunications workers and 65 percent of workers in finance had been reemployed.

Although displaced workers have confronted difficulties even when the economy is strong, the Labor Department surveys show a clear difference between conditions now and conditions before the recession.

Contrasting the recent Labor Department data against the data from the three-year period leading up to the recession shows the difference:

In the pre-recession survey, the percentage of displaced workers who were reemployed was 11 percentage points higher; the percentage of displaced workers who found jobs that paid as well or better was 11 points higher; and the percentage of displaced workers who remained unemployed was nine points lower.

 
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