Jobs may take years to return

LOS ANGELES — The U.S. economy will eventually rebound from the recession. Millions of American workers will not.

What some economists now project — and policymakers are loath to admit — is that the U.S. unemployment rate, which stood at 9.6 percent in August, could remain elevated for years to come.

The nation's job deficit is so deep that even a powerful recovery would leave large numbers of Americans out of work for years, experts say. And with growth now weakening, analysts doubt that companies will boost payrolls significantly anytime soon.

Unemployment, long considered a temporary, transitional condition in the United States, appears to be settling in for a lengthy run.

"This is the new reality," said Mark Zandi, chief economist at Moody's Analytics. "In the past decade we've gone from the best labor market in our economic history to arguably one of the worst. It's going to take years, if not decades, to completely recover from the fallout."

Major employers, including automakers and building contractors, were at the core of the meltdown this time around. Even when the economy picks up, these sectors won't quickly rehire all the workers they shed during the downturn.

Many small businesses, squeezed by tight credit and slow sales, similarly aren't in a hurry to add employees. Some big corporations are enjoying record profits precisely because they've kept a tight lid on hiring. And state and local governments are looking to ax more teachers, police officers and social workers to balance their budgets. Meanwhile, U.S. legislators have shown little appetite for a new round of stimulus spending.

It all points to a long slog for the nation's unemployed.

In May, a record 46 percent of all jobless Americans had been out of work for more than six months. That's the highest level since the government started keeping track in 1948, and it's about double the percentage of long-term unemployed seen during the recession of the early 1980s.

Jobless Americans such as Mignon Veasley-Fields of Los Angeles don't need government data to tell them that something has changed. A former administrative assistant at a Chatsworth charter school, she has searched fruitlessly for employment for more than two years. She's losing hope of ever working again.

"If I were 18, I'd say, 'I can bounce back.' But I'm 61," said Veasley-Fields. "It's really scary. It's like someone just put a pillow over your head and smothered you."

Laid off in June 2008 from her $45,000-a-year post, Veasley-Fields at first wasn't overly concerned. A college graduate, she had always enjoyed steady employment, including a long stint as a research manager at consulting firm McKinsey & Co. She crafted a crisp resume, networked through job clubs and navigated online employment sites like the seasoned researcher that she is.

But weeks stretched into months, with hundreds of unanswered job applications. California's jobless rate in July stood at 12.3 percent, the third-highest in the nation, behind Nevada and Michigan. Veasley-Fields' unemployment benefits have run out, her credit cards are maxed.

She fears losing the bungalow where she and her 77-year-old husband are raising two granddaughters. Above all, she's stunned that a middle-class life that took decades to build could unravel so quickly. She recently visited a food bank to secure enough staples to feed the girls.

"I'm just hanging on a thread," she said.

State of labor market

Veasley-Fields suspects her age isn't doing her any favors. Indeed, 50.9 percent of unemployed workers 55 to 64 have been out of work at least 27 weeks. That's the highest percentage of long-term employment for any age group.

But young workers are suffering too. In August, the unemployment rate for workers 16 to 24 was 18.1 percent.

Research has shown that economic downturns can stunt the prospects of these new entrants to the job market for a decade or longer. Some college graduates unable to find jobs in their chosen fields must trade down to lower-skilled, often temporary work that translates into puny wages, missed opportunities and a slower climb up the career ladder.

For the U.S. labor market to regain all the jobs it had when the recession started in December 2007, employers would need to boost their payrolls by 7.6 million positions. That figure doesn't include the roughly 125,000 jobs a month the country must create just to keep up with new entrants into the labor force.

To get the U.S. jobless rate back to 5 percent, where it was before the downturn, would require the economy to generate about 17 million jobs — or about 285,000 a month for five straight years — according to Heidi Shierholz, a labor economist at the Economic Policy Institute in Washington.

To appreciate the scope of that employment hole, consider that U.S. employers have shed 283,000 jobs since May.

Long recovery expected

Ask economists to project which industries might spark robust job creation and the news isn't encouraging for America's 14.9 million unemployed workers.

Sectors that traditionally have led the nation out of recession — including home building and financial services — are laboring amid a housing glut and a credit freeze. The U.S. auto industry, long under assault by foreign manufacturers, just completed a brutal downsizing. Outsourcing of call centers and other service jobs to places such as India is growing, too.

Meanwhile, U.S. productivity grew steadily through 2009 and into the first quarter of this year, in part because many employers replaced people with technology and are working their existing staffs harder.

"It's going to take a long time to get back," economist Shierholz said. The nation is looking at "eight or nine years of elevated unemployment, and we just haven't seen anything like that."

Veasley-Fields, the unemployed administrative assistant, is now considering applying for Social Security when she turns 62. That will mean reduced benefits in her later years. But with the job market so poor and retraining opportunities limited for someone her age, she said she may have no choice.

Others are coming to the same conclusion. A record 2.74 million seniors applied for Social Security in 2009; more than 70 percent sought early benefits.

Desperation is growing, said Ofer Sharone, an assistant professor at MIT's Sloan School of Management who has spent the last year interviewing dozens of long-term jobless workers.

"The U.S. is clearly not equipped to deal with this high level of unemployment," Sharone said. "People are running out of benefits, health insurance, retirement and pensions."