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Unemployment, Inc.: Six reasons why America can't create jobs

UPDATE: No net growth in new jobs in August kept the US unemployment rate at 9.1 percent. Six reasons the country is struggling to put people to work – and why it may not last.

By Staff writer / September 2, 2011

This is the cover story for the Sept. 5 weekly edition of the Christian Science Monitor.

Nancy Stahl illustration

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At age 25, Kasondra Clanton is a mom, a grad student, and, most worrisome to her at the moment, unemployed. Until recently, she worked as a drug counselor in Mississippi's Noxubee County School District. But local officials decided not to renew her three-year contract amid a paucity of public funding.

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Now she and her boyfriend, Andron Harris, are struggling to make a better life for themselves and their 18-month-old daughter, Heaven. The main problem for both: an unforgiving job market.

Mr. Harris is employed. He slings boxes at a local warehouse for $9.82 an hour. But he says he has little hope for a raise or promotions. As a result, he has been looking for months for a better job – applying for more than 50 so far – and has gone back to school to learn to be an electrician.

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Ms. Clanton, for her part, is working on a master's degree in psychology. But both have discovered how hard it can be to find new work – with or without burnished academic credentials – in a state with a 10.4 percent jobless rate.

"Everywhere I go, they say I'm overqualified," says the young mother at the Leigh Mall in Columbus, Miss. While she chats, Harris shifts the baby from one hip to the other and skims e-mails on his phone, one of which relays a familiar message: latest job application rejected. "It makes me sad," Clanton goes on. "People say, 'Go to school and you'll get a job.' There's no guarantee you'll get a job."

He's looking. She's looking. Nearly 14 million other Americans who are out of work are looking. All this even though the nation officially exited recession more than two years ago.

With the exception of August, the economy generally has been adding at least some new jobs each month, so it's not entirely accurate to call this a "jobless recovery," a name that's been used for tepid job markets after the two most recent recessions, those ending in 1991 and 2001. But it could be that the slow recovery symbolizes something just as troubling: a "less jobs economy," one with a set of deeper challenges that may mean it will be years before the United States gets back to anything near full employment.

Certainly the current moment differs sharply from past recoveries from recession since World War II. It's different in its depth, with 6 percent of all US jobs disappearing. It's different in its duration, with the nation still nowhere near regaining those lost jobs two years later. (See chart, page 30.)

And the question of what's wrong is all the more important now because of new worries that the US is close to tipping back into recession. That could be particularly debilitating given the high level of unemployment and concerns that policymakers have already used much of their available ammunition in efforts to revive growth.

So what's going on?

Some economists say it's a simple but harsh reality: Rebounding after a financial crisis simply takes longer than a typical recovery from recession. This is the first time America has been through such a process since the Great Depression. No doubt this explains a lot of the problem, when you factor in the crisis-related issues of high debts (public and private) and a housing market still hobbled by foreclosures and "underwater" mortgages, where the loan balance outweighs the value of the house. After all, recovery from recession usually happens in part because people and businesses can take out new loans and because home building resuscitates.

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