Trends

Who is Feeling The Pains of Unemployment and Why

The nationwide unemployment rate has hovered around 10% throughout 2010: a pretty straighforward sign that the job outlook is poorer now than it was before the recession began. Unfortunately, that rate does not tell us much more. In a country of fifty states and over 300 million people, unemployment is bound to be more prevalent in some areas and professions than in others. Some are scarcely affected by recessionary unemployment at all. Others are being hit even worse than nationwide unemployment data suggest.

Here are the hardest-hit industries and areas throughout the country.

Automotive Employees

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Automobile manufacturing is one of the industries hardest hit by recessionary unemployment. The struggles of Detroit’s “Big Three” automakers (GM, Chrysler and Ford) have translated to huge job losses and the city has only quite recently displayed the faintest signs of recovery. As recently as mid-December 2009, the Huffington Post and Detroit News reported that Detroit’s true unemployment rate was nearly 50%, taking into account (as Bureau of Labor statistics do not) underemployed workers and those who have given up looking for work. For much of 2009, Detroit’s unemployment rate surpassed that of any major city in the country. As of April 21, the official unemployment rate in the Detroit metro area (including the suburbs) exceeds 15% – a third above the national average. Unemployment in Detroit itself is a whopping 25%.

Construction Workers

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Recessions by their very nature tend to diminish demand for new construction projects. The current financial crisis, sparked by a real estate and mortgage market crisis, has been even harsher to the construction industry. In February, USA Today revealed that construction remains “mired in its worst downturn since the Great Depression.” So severe have been the job losses in this sector (including 75,000 in January) that it alone prevented U.S. employment from producing a gain that month, its second gain in two years. While the nationwide unemployment rate is roughly 10%, construction’s unemployment rate was said to be nearly 25% – its highest since 1976.

Of all job losses in 2009, construction accounted for roughly a quarter. And unlike other fields, construction workers are not always waiting around to be called back to work. According to USA Today, many contractors are doing jobs for less than cost, some are shutting down, and others are opting for career changes like trucking and airplane repair. Worse yet, the industry was projected to lose 50,000 more jobs per month throughout the first half of 2010.

The Financial Sector

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It’s no surprise that one of the industries at the nexus of the recession – financial services – has been hit hard by unemployment. The financial sector’s job losses had a particularly damaging effect on New York City. A September 2009 article in the New York Times cited ongoing Wall Street layoffs for New York’s 16-year record unemployment rate of 10.3%. Despite having been the primary driving force behind new job creation before the financial meltdown, the Times wrote that the financial sector is presently in a “state of emergency” – an assessment shared by New York’s State Department of Labor, which authorized $11 million in federal funds to assist laid-off Wall Street workers in starting new careers.

The nearly 2% difference between unemployment in New York City and New York state is, likewise, attributed to financial sector layoffs. As recently as February 2010, BusinessInsider.com noted that New York state’s unemployment website had crashed as a result of too many claimants attempting to visit it simultaneously.

Long-Term Unemployed

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Few groups have been hit as hard as the long-term unemployed. According to the Pittsburgh Post-Gazette, the 6.1 million people who have been unemployed for six months or more are feeling the strongest recession pains of all. Of the 14.7 million people officially reported by the Bureau of Labor Statistics as unemployed in December 2009, nearly 40% were long-term unemployed. A February 2010 New York Times article labeled these individuals “the new poor,” noting that today’s long-term unemployment rate is the highest since such statistics were first collected in 1948.

Drilling even deeper into long-term unemployment statistics, the Times finds that men in particular have withstood the highest number of job losses in this recession. Women between the ages of 45 to 64 have also seen a spike in extended job losses.

Another frightening trend: prior to 1990, it took, on average, 21 months for lost jobs to be added back to the economy. After the 1990 recession, that number jumped to 31 months, and after the 2001 downturn, it soared to 46 months.