GO
Loading...

A Jobless Rate Still Unaffected by New Hiring

After hemorrhaging jobs for months, the economy is finally starting to add them. Yet the unemployment rate is not really budging because of people like Regina Myles.

Ms. Myles, 51, has been out of work for three years. After a grueling job search yielded 150 interviews but no offers, she simply stopped looking last fall. Then this spring, with a $3,000 government-funded grant to help pay for a training course at a local beauty school in this Chicago suburb, she began applying for jobs online and in stores again.

Unemployment line
Getty Images
Unemployment line

“I just know if I am given this chance to finish this course I can make it,” Ms. Myles said after practicing a facial on a classmate at the International Skin Beauty Academy. “I feel like it is my time now.”

Millions of people became so discouraged during the brutal recession that they gave up the job search altogether. Some entered training programs to redirect careers; others focused on caring for family members. Some college graduates, despairing of their prospects, enrolled in graduate school, rather than hunt for jobs.

Now many of them are beginning to look for work again, encouraged by four consecutive months of job growth and reports of a strengthening economy. But the initial return to the labor force may prove dispiriting, since so many people are already chasing too few jobs.

Because the government does not count people as unemployed unless they say they are actively searching for work, many discouraged people have been hiding in the shadows.

Heidi Shierholz, an economist at the Economic Policy Institute in Washington, estimates about 2.4 million “missing workers” either left the labor force or did not enter it in the last 28 months. That is on top of the 15.3 million people who are officially counted as unemployed.

Although economists expect the jobs report scheduled for release on Friday to show that employers added perhaps half a million jobs in May, that kind of growth would have to be sustained for some time to absorb the backlog.

“The problem is if they come back into the labor force because they perceive that jobs are being offered again, but they come in at a faster rate than those jobs are really being offered,” said Ian Shepherdson, chief United States economist at High Frequency Economics.

In other words, just because it has rained for a few days does not mean the drought is over.

In April, those people who started looking again helped push the unemployment rate to 9.9 percent, from 9.7 percent in March and close to this recession’s peak of 10.1 percent last October.

If, as some economists predict, the unemployment rate edges up or remains stubbornly high, that could prove a political problem for the Obama administration heading into the fall midterm elections.

Career Fair
Getty Images
Career Fair

To a certain extent, the bad news is also the good news. The fact that people are looking for work again “is a vote of confidence in the overall economy,” said Ken Goldstein, an economist at the Conference Board.

Ms. Myles, who speaks in a low timbre and is quick to smile, is trying to remain optimistic during her renewed job hunt.

After a bitter divorce in 2007, she lost her job managing a tax preparation office that she ran with her ex-husband for eight years. To supplement $900-a-month alimony payments, she applied for everything from secretarial positions to fry cook at a McDonald’s . She tried for so many jobs online, she said, “I think my résumé is on YouTube at this point.”

Last fall, she thought she was finally close to getting hired when she was called back for a third interview for a clerical job at a pharmaceutical company.

When it did not work out, she hit bottom. For weeks, she sat at home, crying and wondering how she would pay her rapidly accumulating bills.

Around the holidays, a neighbor told her J. C. Penney was hiring, and Ms. Myles decided to dip her toe back into the job market. She still did not have any luck, but early this spring, she pulled together the application for a government grant to help pay for beauty school.

When she graduates in October, Ms. Myles expects her new skills will help her find a job. “People have a tendency to figure out a way to do our beauty products,” she said.

In the Chicago area, which lost 360,000 jobs — or about 8 percent of its jobs base from the beginning of 2008 through 2009, according to an analysis by Moody’s Analytics — those re-entering the market confront a sobering landscape.

At a job fair last week in Palatine, another Chicago suburb, Matt Landmeier, a recruiter for Just Energy, a local natural gas and electricity supplier, collected 110 résumés from a line of half-haggard, half-hopeful candidates. A majority told him they had been out of work a year or longer.

Recruiters and economists worry that those who quit the labor force for a while will have difficulty competing with younger workers or people who have been out of work for only a short period.

Even with a robust recovery that creates three or four million jobs in the next year, said Lawrence F. Katz, professor of economics at Harvard, “most of those jobs will go to new entrants and short-term unemployed people.”

Hourly rate expectations

That concern is not lost on Roman Landa, a former mortgage broker in Glenview, another Chicago suburb, who suspended his job search in frustration early this winter after applying for nearly 700 positions in three years.

Because he has been out of finance for so long, he fears it is getting harder to go up against younger workers. “It’s like a boxer who is closer to retirement thinking he is as good as he was when he was 20 years old,” he said.

Mr. Landa, 36, who stayed home with his six-year-old son for two months without looking for work, started searching again in April. He has a promising lead, but if he does not receive an offer soon, he plans to enlist in the Army. “I need to take care of my family,” he said.

In some industries, the outlook is improving enough for re-entrants to find jobs. In April, manufacturers added 44,000 jobs, the largest increase since 1998. In Rockford, a manufacturing outpost west of Chicago, Donald Ritter, who was laid off 14 months ago, recently found a temporary job operating a machine for a hydraulics company.

Mr. Ritter, a boyish 52, had stopped submitting applications in the fall, when the want ads dried up. “I was not applying for work because there was no work,” he said.

Last month, he noticed an advertisement for eight immediate openings at the hydraulics firm, and pounced. He started there a few weeks ago at $13 an hour, a significant cut from the nearly $20 he was making a year ago. “Essentially, I am just going to get caught up by the time I am supposed to retire,” he said.

Ms. Myles, too, is discouraged by job prospects that will barely cover her expenses. But on a recent afternoon, she was determined not to lose hope again.

After finishing classes at the beauty academy, she drove to a nearby strip mall and dropped into an outlet of Tuesday Morning, a retailer that sells closeout housewares. A manager directed her to a computer kiosk in the corner.

In response to the question “What are your hourly rate expectations?” Ms. Myles quipped, “$4,000 an hour?” but typed in $12.

Once she finishes beauty school, Ms. Myles figures that at the least, she can administer facials and wax treatments from home.

For now, she is on the hunt. After finishing at Tuesday Morning, she spotted a Barnes & Noble across the parking lot. “I think I’ll go apply there,” she said, and sped off.

Contact Politics

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More