The New Poor

If you have time to read the whole thing, I'd recommend reading this article in this Sunday's New York Times. Maybe it's a predictable enough story--that this time, even more so than the last time, jobs are not likely to surge back with the rest of the economy--but worth reading anyway.

If you don't have the time, here are the highlights:

Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.

[...]

Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn.

At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.

[...]

Yet as jobs have become harder to get, so has welfare: as of 2006, 44 states cut off anyone with a household income totaling 75 percent of the poverty level — then limited to $1,383 a month for a family of three — according to an analysis by Ms. [Randy] Albelda.

“We have a work-based safety net without any work,” said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin, Madison. “People with more education and skills will probably figure something out once the economy picks up. It’s the ones with less education and skills: that’s the new poor.”

It's hard to imagine what the long-term policy solution to this will be. In the meantime, I think it's self-evidently important that the government extend unemployment benefits to keep people afloat, if for no other reason than to allow them to keep looking for work. But it also seems that the U.S. is structurally a very different animal than it was two decades ago. I know I'm not saying anything new here. The question was being asked even before the recession but it's obviously that much more pertinent now: where are the new jobs going to come from?