The Effects of the Great Recession on American Workers: What it Means for Workforce Policy and Practice

The Effects of the Great Recession on American Workers:

What it Means for Workforce Policy and Practice

Carl Van Horn, Ph.D.Professor and Director

John J. Heldrich Center for Workforce Developmentand Edward J. Bloustein School of Planning and Public Policy

Presented to the International Association ofJewish Vocational Services, Toronto, Canada

May 2, 2011

www.heldrich.rutgers.edu

The Effects of the Great Recession on American Workers

2

An Unprecedented Recession

The nation’s longest recession

Highest official unemployment rate in 30 years

Over 17 million officially unemployed; millions more discouraged or underemployed

8.5 million jobs lost since December 2007

Longest average length of unemployment in 62 years


3

The Unemployment Experience

Source: Van Horn, C., and Zukin, C., “The Anguish of Unemployment,” New Brunswick, NJ: John J. Heldrich Center for Workforce Development, Rutgers University, September 2009.

89%

55%

53%

84%

78%

60%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Not a Good Chance of Returningto Previous Position

Unemployed for First Time in FiveYears

No Health Insurance

No Severance Pay

Laid Off, Less than Two WeeksNotice

Laid Off Without Warning


4

Employment Status of Workers Who Lost JobsDuring the Recession

August 2009 March 2010 November 2010

Unemployed and Looking

75% 54% 54%

Unemployed, Not Looking, Discouraged

5% 13% 13%

Employed Full time Part time, don’t want full time

19% 33% 34%(26%)(8%)

Total 99% 100% 101%

Number of Respondents

1,202 908 764

Source: Van Horn, C., and Zukin, C., “Unemployed Workers and the Great Recession: Highlights from the Heldrich Center’s Work Trends Reports, 2009-2010,” New Brunswick, NJ: John J. Heldrich Center for Workforce Development, Rutgers University, January 2011.


5

Employment Status by Demographic Groups


Employed Not in Labor Force

Unemployed and Looking

for Work

Total % Total Number

Age

18 - 34 41% 12% 47% 100% 161

35 - 54 32% 12% 57% 101% 332

55+ 21% 17% 62% 100% 271

Education

High school or less 33% 17% 51% 101% 198

Some college 28% 5% 67% 100% 265

Bachelor’s degree or higher

43% 14% 42% 101% 301

Gender

Male 35% 13% 53% 101% 378

Female 31% 13% 56% 100% 386

Race/Ethnicity

White, non-Hispanic

37% 12% 51% 100% 542

Black, non-Hispanic/Other, non-Hispanic / Hispanic

29% 11% 60% 100% 150

Income

Less than $30K 27% 14% 60% 101% 245

$30K - $60K 29% 10% 61% 100% 244

More than $60K 56% 16% 28% 100% 275


6

Duration of Unemployment


47%

22% 23%

24%

22%12%

15%

32%

29%

10%16%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Wave 1 Panel, August2009

Wave 2 Panel, March2010

Wave 3 Panel,November 2010

0 - 6 Months 7 Months - 1 Year 1 - 2 Years More than 2 Years


7

Severe Financial Impacts of Unemployment


Economy has Major Impact on

Family

Poor Financial Shape

Family’s Financial Situation is Worse Compared to Two

Years Ago

Have a “Lot Less” in Personal Income

and Personal Savings

Full Sample 61% 46% 57% 58%

Employment StatusUnemployed 67% 60% 61% 65%Long-term unemployed 75% 74% 68% 76%Reemployed 52% 27% 52% 48%

Age18 - 34 51% 41% 47% 46%35 - 54 69% 51% 64% 67%55+ 67% 47% 66% 65%

EducationHigh school or less 58% 49% 57% 61%Some college 67% 53% 59% 60%Bachelor’s degree or higher

59% 31% 55% 48%

GenderMale 61% 49% 61% 57%Female 61% 42% 52% 59%

RaceWhite, non-Hispanic 56% 45% 59% 57%Black/Hispanic 69% 48% 54% 61%


8

Reduced Spending During the Recession


84%77% 76%

56% 54% 53% 52%

69%

53%

39%32%32%

67%72%

0%

25%

50%

75%

100%

Entertainment Clothing Travel/Vacations Transportation Food Health Care Housing/HomeUpkeep

Unemployed Reemployed


9

Trying to Make Ends MeetUnemployed, March 2010

70%

42% 41%

30%

20% 20%18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Used Money fromSavings to Make

Ends Meet

Went withoutMedical Care for

Myself or My Family

Sold Some of myPossessions to Make

Ends Meet

Used Food Stamps Forced to Move toa Different House or

Apartment

Moved in withFamily or Friends to

Save Money

Went to a SoupKitchen or Free

Food Pantry

Source: Borie-Holtz, D., Van Horn, C., and Zukin, C., “No End in Sight: The Agony of Prolonged Unemployment,” New Brunswick, NJ: John J. Heldrich Center for Workforce Development, Rutgers University, May 2010.


10

Sinking Deeper into DebtUnemployed, March 2010

56%

45%

25% 24%

11%

6%3%

0%

10%

20%

30%

40%

50%

60%

Borrowed Moneyfrom Family or

Friends

Increased CreditCard Debt

Missed a CreditCard Payment

Missed a Mortgageor Rent Payment

Borrowed MoneyAgainst Your House

or from a Bank

Declared PersonalBankruptcy

Lost my Home toForeclosure



11

The Emotional Costs of UnemploymentAugust 2009 and March 2010

7975

6967

54 54

48 47

42

4953

47 46

36 3531

23

17

0

10

20

30

40

50

60

70

80

90

Stressed Eager NewStart

Depressed Anxious Helpless Angry Hopeless Hopeful Motivated

August

March



12

Personal Impacts of Unemployment

61%

41%

58%

52%

62%

10%

55%

60%

44%

51% 52%

68%

13%

43%

63%

46%

52%55%

71%

14%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Change in SleepingPatterns/Loss of Sleep

Loss of Contact withClose Friends

Strain in Family Relations Avoid Social Situationswith Friends andAcquaintances

Uneasiness orRestlessness

Substance Dependency Quick to Anger

All Unemployed in August 2009 All Unemployed in March 2010 Unemployed in August and March



13

Policy Changes

Extend and reform Unemployment Insurance; ensure coordination with reemployment services

Enhance advance warning laws; more robust rapid response

Incent lifelong learning opportunities with emphasis on attainment of certificates and degrees

Bolster resources for the Workforce Development System


14

Practice Reforms

Link workforce development with economic development and employer needs

Build stronger connections with other organizations that serve the unemployed

Expand on-the-job training and apprentice programs

Enhance labor market intelligence to help job seekers

Set and enforce standards for program quality


15

Contact Information

Carl Van Horn

[email protected]

732.932.4100 x6305

www.heldrich.rutgers.edu