Report: NYers Facing Potential Economic "Lost Decade"
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 the current economic recovery continues to be the weakest on record since the Great Depression of the 1930’s.FPI economist James Parrott says while New York overall had the sixth best job growth performance among all 50 states , the rate of unemployment stayed above 8% for four years, until it dropped slightly in April. Economists consider it a recession when the jobless rate is 8% or higher. Parrott says the average length of time that unemployed New Yorkers have been out of work is 37 weeks, or about 8 months. That’s longer than the national average of seven months. He says the lengthy periods of joblessness have ripple effects that range from defaulting on payments for houses and cars, to depleting retirement savings, to health problems.
“Divorce rates are higher among people who have been unemployed for 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 industries like restaurants and retail. 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’s a wide gap between the financial conditions of downstaters compared to upstaters. New York City is doing relatively well, there are nearly 5% more jobs than before the recession began in 2008. But wide swaths of upstate are mired in recession, with an average of 1.6% 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 bail out of Wall Street. He says the 2009 stimulus program of $800 billion dollars 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’s been a 5% decline in government jobs, mostly due to teacher lay offs. 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. Parrott says New York raised the minimum wage this year, though he thinks the long phase in 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.