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For Jobless, Little Hope of Restoring Better Days

People across the working spectrum suffered job losses in recent years: bricklayers and bookkeepers as well as workers in manufacturing and marketing.

Winston Davidian | Photodisc | Getty Images

But only a select few workers have fully regained their footing during the slow recovery.

Katie O’Brien Mowery is one of the lucky ones. After losing her job in the marketing department of a luxury resort in Santa Barbara, Calif., in early 2010, she eventually found a position with better benefits and the promise of a brighter future.

“I wished that it happened sooner than it did,” said Ms. Mowery, who is in her mid-30s, referring to her nearly yearlong job search. “But looking back, my new position wouldn’t have been available when I was laid off, and now I’m very happy.”

A new study shows just how rare people like Ms. Mowery are. According to the study, to be released Friday by the John J. Heldrich Center for Workforce Development at Rutgers, just 7 percent of those who lost jobs after the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles.

The vast majority say they have diminished lifestyles, and about 15 percent say the reduction in their incomes has been drastic and will probably be permanent.

Bill Loftis is one of the unfortunate ones. He is without a college degree or specialized skills and also worked in an industry, manufacturing, that has added back only about 13 percent of the jobs that it lost during the recession .

After 22 years on the job, Mr. Loftis, 44, was laid off from a company that produces air filters and valves in Sterling Heights, Mich., three years ago. Managers “looked me dead in the eye,” he recalled, “and said, ‘We’re laying you off, but don’t worry, we’re calling you back.’ ”

He has heard nothing since. Despite applying for more than 100 jobs, he has been unable to find work. He has drained most of his 401(k) retirement fund, amassed credit card debt, and is about to sell his car, a 2006 Dodge Charger.

“It’s looking hopeless,” he said.

According to the Rutgers study, those with less education were the most ravaged by job loss during the recession. Even among those who found work, many made much less than before the downturn.

“The news is strikingly bad,” said Cliff Zukin, a professor of public policy and political science at Rutgers who compiled the study, which was based on surveys of a random sample of Americans who were unemployed at some point from August 2008 to August 2009. The numbers represent “a tremendous impression of dislocation and pain and wasted talent,” he said.

More than two years after the recovery officially began, American employers have reinstated less than a quarter of the jobs lost during the downturn, according to Labor Department figures. Of the 13.1 million people still searching for work, more than 42 percent have been unemployed for six months or longer. About 8.9 million more are working part time because they cannot find full-time work.

While health care and some energy-related jobs have boomed throughout in recent years, the other winners have mostly been in skilled professions like computer systems design, management consulting and accounting, where employers have added back as many or more jobs than were cut during the downturn.

Companies like Ernst & Young, KPMG and PricewaterhouseCoopers, which offer accounting and other business advisory services, as well as management consulting firms like Bain & Company, have returned to peak hiring levels. Many Silicon Valley firms are aggressively recruiting. Google, for example, announced that it has hired more people in 2011 than in any previous year.

Other employers are adding back jobs that were cut, though not yet enough to reach prerecession peaks. What is more, these jobs are in areas like retail, hospitality and home health care, categories that pay low wages and are unlikely to give workers much economic security.

The sectors that have been slowest to recover are those that endured the most acute job losses, like construction and state and local government. Construction workers are among the biggest sufferers, stung by a housing collapse that led to the loss of two million jobs. Since the recovery began, the industry has added just 47,000 jobs.

Even manufacturing, which has shown a relatively healthy pace of job creation during the recovery, has added just over a tenth of the 2.3 million jobs that disappeared in the downturn.

“This recovery is really not a fair and balanced recovery,” said Scot Melland, chief executive of Dice Holdings, an online job search service. “There are certain sectors that have done well, and others that haven’t done well at all. If you’re in one of the losing sectors, it’s very tough.”

Based on previous recessions, employers would have been expected to fill more jobs at this point in the recovery. But the kinds of jobs that typically return first have lagged this time around.

“Construction is usually one of the earlier sectors to come back,” said Harry J. Holzer, an economist at Georgetown University and the Urban Institute.

Because she had a college degree, it never occurred to Ms. Mowery that she would not eventually find a job. While collecting unemployment benefits, she tapped her network of friends and sought out the services of a unit of Randstad Holdings, a job placement firm. To brush up on her skills, she took online tutorials in software programs like Photoshop and InDesign.

When she landed a new marketing job last December at a company that resells networking equipment, she started at the same salary she had earned before, but with improved health and retirement benefits and more opportunities for promotion.

“I didn’t want to just take a job, but make a career move,” she said. “I was pretty confident. Things have a way of working out.”

Others are more desperate. Some of them are sending out scattershot applications for jobs for which they are overqualified. Jaison Abel, senior economist at the Federal Reserve Bank of New York, said there was “some evidence that people who, in a different time, would have been entering the work force in midskilled jobs are now entering into the lower-skilled jobs.”

Some are trying for slots even if they do not meet basic qualifications. PricewaterhouseCoopers received more than 250,000 applications through its Web site over the last year, but it has hired only 1 percent from that pool, said Holly Paul, its United States recruiting leader. She said a house painter with no qualifications beyond high school had applied for 10 different openings that required college degrees and accounting certification.

“It’s definitely an eye-opener for me because it gives you an idea of what unfortunately is happening in the economy,” said Ms. Paul.

Even many of those who have managed to find a job are struggling to restore financial stability. “They have had to take pay cuts or benefit cuts or maybe they don’t get any vacation,” said David Elliot, communications director for USAction, a coalition of grass-roots groups that will release a report on Friday about the experiences of unemployed and underemployed workers.

Mr. Loftis stays at his home in Michigan with his 4-year-old twins and looks for ways to shave costs. He and his wife, who has returned to work in a $10-an-hour factory job, canceled their cable service and no longer travel to see her family in the Philippines or relatives in Florida or Tennessee.

As he continues to apply for work, Mr. Loftis said employers have told him he has been out of a job for too long. “It’s just hard,” he said. “What can you do to get back on track, you know?”

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