In October, 29 states saw their unemployment rates rise according to the Bureau of Labor Statistics. In September it was only 22. Leading the pack were Michigan (15.1 %), Nevada (13 %) and Rhode Island (12.9 %).
I’m sure as we go into the fourth quarter and layoff season begins anew, that those rates will only continue to worsen. The question is will job creation begin en masse at the beginning of next year? What do we do if it doesn’t?
Well some have called for more stimulus spending, but there’s a new scary number in town: the federal debt.
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
John Henion is a freelance video producer in the San Francisco Bay Area. He was laid off from a staff position in 2008 (full disclosure: at Current) and entered into the freelance world. He blogs about unemployment at Unemploymentality.com. We spoke yesterday for The Real Recovery.
John Henion and Dog
Life for a freelancer can be tough – especially at the beginning. John Henion moved out to California from Michigan where he’d already established himself with freelance work. In California he had none. He said the move made him “take a step back and do things I didn’t want to do.” For example, John was about 30 when he moved here, had already produced his own independent documentary, but found himself taking a production assistant role on “Wife Swap” just to be working. “I was beyond the point where I wanted to pick up trash on the set and being told to go get lunches,” he said. “After that experience I realized I didn’t need to lower the bar that much.”
The goal as a freelancer is to have steady work. There are some great benefits – like being your own boss and scheduling your own time off – but there are somethings that are definitely not benefits – like not having benefits. John was lucky to have insurance through a domestic partnership with his girlfriend, but he said for many freelancers the decision about whether or not to get insurance is just whether or not you want to take your chances.
After being laid off, John said it took him about 6-8 months before he was getting steady work again. These days, he has about 5-6 return customers and pulls in a lot of one-off projects. He’s been able to work himself back up to an income level comparable to having a full-time staff position. But that comes with a lot more work than just the actual time spent working. “The worst part is…I have to deal with chasing down money. Some people wait until the last minute to pay you or wait until you raise a stink. You know, they want to keep that money on their books as long as they can.”
The most important thing John has found to remember freelancing is that no matter how much time he spends at an office, no matter how many new friends he makes in a workplace, being a freelancers puts him in a different position. “As a freelancer they can just stop calling. First time that happened I thought I did something wrong….When they stop calling it’s not personal….They’re not supposed to roll over and kiss you in the morning, just leave some money on the bedstand.”
Well outside of the various nitpicks that can be done to both of those numbers, one big culprit is “underemployment”. We’ve been talking about underemployment a lot in The Real Recovery because I think it’s a more accurate measure of how many Americans have been affected by the recession. If you “get discouraged” and stop looking for a job, you no longer count as “unemployed”. Or, as we’re talking about this week: if you go freelance part time.
Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers
In October, when we saw that big 10.2% unemployment number, the U6 number was at 17.5% Nearly a fifth of the population!
You know what that does not include though? All the Americans who’ve taken pay cuts or reduced hours in the recession. (More digging through numbers to come).
Want to get involved with The Real Recovery? Here’s two easy things you can do:
- Post your story to the group. How have you been affected? Are you underemployed? Have you taken a pay cut?
- Help me find some other numbers to look at. How many Americans have taken pay cuts?
Now that the House has passed its version of the healthcare bill, Speaker Nancy Pelosi is shifting her focus to jobs. With unemployment in the double digits and not showing any signs of getting any better, Democrats want to show some sort of progress on getting Americans back into the workplace. The hope is to have either a big bill or a package of smaller bills passed in December. How will they create new jobs? Well the House is looking at getting a big highway construction bill moving – but no one seems to know how they would pay for it – which would mean adding to the deficit.
President Obama has called for a summit in December between lawmakers, administration officials, small businesses, chief executives and union representatives to talk about how to get a handle on unemployment. The AFL-CIO has already given a preview of its ideas it’ll bring to the summit. For example: Using TARP money to give commercial loans to small businesses and providing healthcare and food assistance for the unemployed.
How successful has the government been at job creation thus far? Recovery.gov, the Administration’s site to let citizens track the effects of the stimulus money, has a big number labeled “Jobs Created/Saved as Reported by Recipients”: 640,329 (as of 10/30). That’s great and all, but by the same home page of the same site about $215B have been spent so far out of the recovery money. Which comes out roughly to $335,000 per job. (That’s just me and a calculator and a few rounded-off numbers – I’m sure better estimates exist out there.)
Another side of the math is that if we replicated those 640K jobs that were created over the course of this year there would still be about 10 million Americans unemployed.
Expensive and difficult!
All right, how do you think we could drive unemployment down? Give us your best ideas.
Hey freelance workers, this week The Real Recovery is all about you. We want to hear from people who freelance successfully, people who have gone freelance after losing their job, and people who are barely scraping by with freelance work.
Did you know: If you’re freelancing, even making far less money than you can survive on, you don’t count as ‘unemployed’? You fall under a different category called ‘underemployment’ – here’s the applicable part of the definition from Wikipedia:
“Involuntary part-time” workers — workers who could (and would like to) be working for a full work-week but can only find part-time work. By extension, the term is also used in regional planning to describe regions where economic activity rates are unusually low, due to a lack of job opportunities, training opportunities, or due to a lack of services such as childcare and public transportation.
This is another topic we want to tackle. As we’re trying to put together a picture of the Real Recovery, we want to try to get a handle on underemployment estimates. We’ll be working on that for the next month or so. If you want to get involved in that effort, send me a message on Current.
And this week – if you freelance or ever have – tell us about your experience by posting your story on The Real Recovery.
This week on The Real Recovery we’re looking at how the recession is affecting college grads. It’s tough to graduate into such a tight job market. Especially if you’ve got loans. For many, going to college automatically comes with a big chunk of money that must be paid off. As finding a job gets harder – that amount of money can hang like an albatross from your neck.
Posted on The Broke Grad Student
This breakdown, posted on The Broke Grad Student, shows average student loan debt by state – and no matter where you live, that average is somewhere between $13K and $26K. That’s a lot of money!
But despite the high costs the question for many American high schoolers is not whether to go but where to go. Are too many Americans going to college?
Marty Nemko: Increasing college-going rates may actually hurt our economy. We now send 70 percent of high-school graduates to college, up from 40 percent in 1970. At the same time, employers are accelerating their offshoring, part-timing, and temping of as many white-collar jobs as possible. That results in ever more unemployed and underemployed B.A.’s. Meanwhile, there’s a shortage of tradespeople to take the Obama infrastructure-rebuilding jobs. And you and I have a hard time getting a reliable plumber even if we’re willing to pay $80 an hour—more than many professors make.
It’s estimated that on average college grads tend to make about 80% more per year in salary than those without a degree. That’s a pretty significant and motivating number, especially when you take into consideration the higher unemployment numbers for those without a college degree that we looked at yesterday. But if you’ve got loans – some of that has to go to paying them off. And for grad students it’s even worse.
Faced with a difficult job market and high student debts, many folks with a B.A. duck back into graduate school to forestall repayments they can’t afford. But as you can imagine – that just leads to more debt. Forbes has a controversially titled article that tackles the high debts a law degree can come with: The Great College Hoax.
Accepted into the California Western School of Law, a private San Diego institution, [John] Kellum couldn’t swing the $36,000 in annual tuition with financial aid and part-time work. So he did what friends and professors said was the smart move and took out $60,000 in student loans.
Kellum’s law school sweetheart, Jennifer Coultas, did much the same. By the time they graduated in 1995, the couple was $194,000 in debt. They eventually married and each landed a six-figure job. Yet even with Kellum moonlighting, they had to scrounge to come up with $145,000 in loan payments. With interest accruing at up to 12% a year, that whittled away only $21,000 in principal. Their remaining bill: $173,000 and counting.
Should you go to grad school? Most experts agree it only makes sense if you have a specific goal in mind. Penelope Trunk’s Brazen Careerist lists several points against enlisting in grad school to hide out from a recession:
1. Grad school pointlessly delays adulthood….3. Business school is not going to help 90% of the people who go….5. The medical school model assumes that health care spending is not a mess.
So what’s your experience? Did you go to college? Grad school? Did you have an albatross of loan debt? Tell us your story on The Real Recovery.
Who is faring the worst in this recession? Everyone is doing poorly – but some groups have been more affected than others. The NY Times Economix blog broke down the numbers by huge swaths of demographics last week.
The graph that caught my eye was the very first one – apropos of our Real Recovery topic this week – how are recent college grads affected?
(That said, when you break it down by education, college grads have done comparatively well – those with less education have been more adversely affected.)
The worst affected group is young, African-American men who are less educated. This neat interactive graphic compares all the different demographic slices. Where do you fall on the graph? Has that been your experience?
This week, the Real Recovery is focusing on college graduates – recent, upcoming and all-time. I wanted to highlight a few stories shared in the comment thread on the initial college stories post. If you have one – go to the Real Recovery group, click Post a Story, and start typing!
I graduated this past May and applied for part time and full time jobs. After months of being rejected by employers for not having work experience because I was earning a college education at the time, I started working as a part time host at a restaurant. I recently picked up another part time job so now I’m working two part time jobs to meet bills. Hopefully I get accepted into grad school next year.
The first term I learned on-the-job after college was “reduction in force”. It was a rude awakening. I finished graduate school in a recession and it took 18 months to find a full-time, regular job. After 15 years in a nice office, I’m looking again, but instead of living at home I have a mortgage to pay. Life is cyclical.
Each week on The Real Recovery we’re going to ask a big question – and then spend the week figuring out the answer with your help. For next week – we’re looking at those entering the job market for the very first time.
If a tenth of America is unemployed – how hard is it going to be for recent college graduates to get jobs? For college seniors who expect to graduate in 2010? From the National Bureau of Economic Research: “The Career Effects Of Graduating In A Recession”:
Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9 percent of annual earnings in the initial stage, eventually recede, but slowly — halving within five years but not disappearing until about ten years after graduation.
Starting Monday – we’re going to focus on college graduates. Here’s how you can get involved:
Are you a college senior?: Post a story on The Real Recovery about your job search. Do you have something lined up? Are you just trying not to think about it?
Did you graduate this year?: How’s it been out there in the job market? Have you been able to find work?
Did you graduate years ago?: How was your experience in the economic climate you had? How does it compare to today’s?
You can post your story to Current by clicking the “Post a Story” button on The Real Recovery group page and then just start typing!
And also, if you want to get involved as an investigator – send me a message on Current.
This week we launched The Real Recovery: we’re working with you on a collaborative investigation into the end of the recession. Sure the Dow is up but are things getting better nationwide?
That’s one in ten Americans who are out of work. A lot of people! (Good timing on that unemployment extension, Congress.) This is why we think it’s so important to get behind the numbers to the experiences people are having. Come help us out – tell your story or be one of our investigators on The Real Recovery.
