In US labour market, many long-time unemployed lose hope

By Miriam Schmidt, DPA,

Washington : There are people in the US who have given up almost all hope of ever finding a job again. Long-term unemployment used to be more of a problem in Europe than the US, but now the number of such people in the US is at a record high. Experts disagree over the reasons, but are deeply worried about the problem.

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Annette Tornberg remembers exactly the day in August 2009 when she lost her job at a printing shop. Her boss called her into his office to tell her the news that he had to let her go.

“My boss said: ‘We have to lay you off, because the economy has really hurt the business and we just don’t have enough work for you to continue’,” she said. Since then, the 50-year-old has been looking for a new job. She has sent 1,000 applications without success despite her 30 years experience and her willingness to take almost any job.

For more than a year Tornberg has been writing applications every day. She has had less than half a dozen interviews since she started looking. She uses the internet to look for jobs and goes to job fairs. Usually she doesn’t hear back at all.

“I’m just trying to be patient and not to be discouraged. But it’s hard, it’s tough,” said Tornberg, who lives in Sacramento, California, where the unemployment rate is 12.4 percent, almost three percentage points above the national average.

People who go longer than 27 weeks without a job are considered long-term unemployed. Not so long ago, the number of people in this group wasn’t significant, but in this year it shot up to record levels. The latest job market report showed that 40 percent of jobless people are long-term unemployed. That’s about 6 million people.

Christine Riordian of the National Employment Law Project, which is committed to looking after the rights of the unemployed in the US, hears stories such as Tornberg’s every day.

“We are basically in a jobs hole where we need in the US right now 11.5 million jobs in order to get everybody back to work who was laid off over the course of the recession,” said Riordian.

Although it is expected to grow by just over 2 percent this year and next year the US economy – the world’s largest – at the moment is not strong enough. “For every five unemployed workers there is only one job. This is something we never experienced before, not even in prior recessions.”

Other experts say the cause has more to do with a skill shortage.

“Firms have jobs, but can’t find appropriate workers,” said Narayana Kocherlakota, president of the Minneapolis regional office of the US Federal Reserve, the country’s central bank. “The workers want to work, but can’t find appropriate jobs.”

What makes it even worse is the longer a person goes without a job, the more his or her skills stagnate, making a return to the job market even more difficult.

A related problem directly resulting from the collapse of the real estate market is that about one-quarter of all homes financed with a mortgage currently are worth less than the amount of debt written against them. Selling would inevitably lead to a loss, preventing people from moving. It’s like throwing sand into the gears of the US job market, once famous for its flexibility, which was aided by the way people could easily move.

Other experts see a lack of demand in the crisis-weary economy as the main cause of the weakness in job growth.

“Real (gross domestic product) is growing, but not fast enough to create the hundreds of thousands of jobs needed each month to return employment to its pre-crisis level,” said Christina Romer, a former top economic adviser to President Barack Obama.

However, a new economic stimulus package is unlikely given the massive amount of debt the US faces and the likely lack of sufficient support in congress to push a package through.

Tornberg currently gets by with financial support from her family. Her husband has a job and aside from that income, friends and family members help her out.

“When we have a birthday and stuff I can’t pay for my meal,” she said. She receives an unemployment payment of $1,080 (785 euro) monthly. But there is a limit on how long she can receive the benefit.

Riordian said many people are using savings. “They are running out of retirement (money) in order just to make it,” she said.

Tornberg refuses to give up. “Sometimes I’m optimistic and sometimes I’m not. But I try to keep a positive attitude,” she said.

Experts, however, aren’t optimistic. The US Federal Reserve expects an unemployment rate in the US well over 7 percent through 2012.