Job gains for the poor now at risk

The current rise in unemployment hits hardest among the low-skilled and minorities - latecomers to the boom.

Last hired, first fired.

That maxim, based on the advantages of seniority in the workplace, means trouble for America's economically disadvantaged, who are starting to see their jobs wilt as fast as spring daffodils in a heat wave.

It's a reversal of progress made during the economic expansion of the 1990s. All segments of the labor force gained, but the last to feel a boom were those who typically have the hardest time finding work: minorities and people with low skills or little education.

Now, after finding work in record numbers, those groups are being hit hardest as the economy slows and joblessness rises.

"The labor market collapses from the bottom up," explains James Galbraith, an economist at the University of Texas in Austin.

April employment numbers, released Friday, show the economy is losing jobs at the fastest clip since the last recession, a decade ago (layoffs make rate cut likely, page 2). And the statistics confirm that those in the lowest job ranks are most affected.

For example, 8.2 percent of blacks were unemployed in April, up from a low of 7.2 percent last September. For whites, joblessness is up half as much in the same period, from 3.5 percent to 4 percent.

More than 31 percent of black teens are looking for work. That's way up from their 21.9 percent jobless rate last November.

Economists suspect the situation will worsen as the overall unemployment rate rises, to perhaps 5 or 6 percent, in coming months. Since unemployment hit a low of 3.9 percent last September, the number of unemployed has risen by 866,000.

Ripple effects

Problems go with higher unemployment: Inner cities become more restless. Crime tends to rise. More marriages fail. The jobless and poor tend to have more health problems. Income inequality grows. Food banks, already bustling, could see demand rise even further. The number of individual and corporate bankruptcies will likely soar.

"We will see a lot more of this stuff," says Richard Freeman, an economist at Harvard University in Cambridge, Mass. "We have had a great economy. If you suddenly take that away, there will be a lot more troubles."

In the past few years, some employers sought out almost any warm body to fill vacant jobs. They transported workers from cities to suburban jobs. They offered day care. They provided special training. They hired the disabled. They bumped up wages and benefits.

Now, it's not just jobs but some of these benefits that are at risk.

"Companies won't have to do those things to get workers - and they won't," says Dean Baker, an economist at the Center for Economic and Policy Research, a Washington think tank.

Barbara Dow's job search

"It's pretty hard for everybody," says Barbara Dow, emerging from a Roxbury, Mass., branch of Job Net, a state employment agency "I have a lot of friends who are out of work." This site, in an industrial part of Boston, has been getting busier lately.

Ms. Dow, a white mother of two, lost her job as a cashier at a Bread & Circus grocery store last September and went on welfare. She has a 4-year-old boy and an 18-year-old girl, who, to her mother's disappointment, has dropped out of high school. Dow has high-school equivalency.

Job Net has found Dow a temporary job checking customer credit for a cellphone company. And she got a day-care voucher for her son. But the job is two bus rides from her home. She will have to pay a friend to pick up her son at the end of the day.

The recent full-employment, boom years have acted like a highly successful social-welfare program. They have enabled women like Dow to find jobs.

Many thought black unemployment would never fall below the double-digit level. Now many of those black and other minority workers who have picked up the job skills needed for steady work are at risk of losing the work.

"Those who gained the most in recent years could lose the most if job losses persist," says Jared Bernstein of the Economic Policy Institute in Washington.

Construction workers are already feeling a squeeze. "Our business has definitely felt a slowdown," says Roger Spinola, a manager at Laborers on Demand, an agency in Framingham, Mass., that often finds work for Spanish-speaking laborers. "Fewer companies need our services."

One intriguing factor in the current job picture is a rise in the unemployment rate for college-educated workers, from 1.6 percent two months ago to 2.3 percent in April. This is seen as related to the collapse of the so-called New Economy, as many Internet companies failed and some telecommunication firms cut back staffs. High-tech, sales, and administrative jobs have fallen by over 1 million since January.

Mr. Baker suspects, however, that these educated workers will not take too long to find new jobs.

The job search will likely be harder for those on the lower end of the pay scale. Temp jobs fell by 121,000 in April. And job possibilities in manufacturing will be slim, with employment in that sector down by 609,000 since July's peak, to the lowest level since May 1965.

What can be done to help? Baker would like Federal Reserve Chairman Alan Greenspan to ease monetary policy further to prop up the economy. The tax cut Congress is considering would also put a helpful $100 billion back into the economy this year, Freeman says. Galbraith urges a boost in the minimum wage, long delayed in the GOP-led Congress, to assist low-paid workers.

"Give people an incentive to work at these menial jobs," says Dow. She recalls working for 43 hours at the $5.15 an hour minimum and taking home a mere $195 in her weekly pay check.

(c) Copyright 2001. The Christian Science Monitor

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