A new report on the status of workers finds the period since the 2008 market crash may turn out to be a “lost decade” for New Yorkers, as wages stagnate and the average time for unemployment lengthens.
The union financed think tank, the Fiscal Policy Institute, finds that the current economic recovery continues to be the weakest on record since the Great Depression of the 1930s. FPI economist James Parrott says that while overall New York had the sixth-best job growth performance among all 50 states, the rate of unemployment stayed above eight percent for four years until it dropped slightly in April. Economists consider it a recession when the jobless rate is eight percent or higher. Parrott says the average length of time that unemployed New Yorkers have been out of work is 37 weeks, or roughly eight months. That’s longer than the national average of seven months. He says the lengthy periods of joblessness have ripple effects that can include defaulting on payments for houses and cars, depleting retirement savings and health problems.
“Divorce rates are higher among people who have been unemployed for a long period of time,” Parrot said. “Their health is poor, suicide rates are measurably higher, and their life time earnings take a hit.”
College educated unemployed New Yorkers are out of work longer on average than high school graduates. Older workers also have to wait longer to find new jobs, and they are often lower paying than the positions that they lost. What job growth has occurred has been in lower paying fields such as the restaurant and retail industries. Parrott says those who are still lucky enough to have jobs have not seen pay increases that keep up with living expenses, and in many cases, have seen their salaries cut.
“Wages in 2012 are less than they were in 2002,” Parrott said.
The survey finds there is a wide gap between the financial conditions of downstaters compared to upstaters. New York City is doing relatively well; there are nearly five percent more jobs than before the recession began in 2008. But wide swaths of upstate are mired in recession, with an average of 1.6 percent fewer jobs than before 2008. The exceptions are Long Island and the Ithaca area, where jobs are growing faster than the national average.
Parrott attributes New York City’s success to the government’s massive financial bailout of Wall Street. He says the 2009 stimulus program of $800 billion helped for a period of time.
“But the effects of that have long since worn off,” Parrott said.
Parrott believes that the federal government needs to spend more money to stimulate the economy. But he concedes that given the current political dynamics in Congress, that’s not likely to happen.
He says unlike past recessions, where governments spent more to boost economic activity, state and local governments have been further cutting spending and jobs. There has been a five percent decline in government jobs, mostly due to teacher layoffs. And, he says, it hasn’t turned out well for the average working New Yorker.
“There’s nothing inevitable about this prolonged high unemployment,” said Parrot. “We know the economic policies that need to be pursued.”
There are some bright spots in the grim report though. Parrott says New York raised the minimum wage this year, though he thinks the long phase-in of the increase won’t boost wages fast enough. And, he says New Yorkers who are wealthy have mostly recovered from the recession, largely due to the stock market rebound and soaring corporate profits.