A new American class: the involuntarily retired

Our local daily newspaper has an excellent story on a new class of unhappy Americans: the involutarily retired.

Kim Lamb Gregory introduces the idea with a study, and then grounds it in Ventura County reality:

"We are witnessing the birth of a new class — the involuntarily retired," said a report called "The Shattered American Dream."

The report, released in December by the Center for Workforce Development at Rutgers University, was a follow-up to an August 2009 survey of those who had been unemployed in the previous year. The follow-up showed that 62 percent of those respondents 55 or older were still unemployed in November 2010, compared with 57 percent of those 35 to 54 and 47 percent of those younger than 35.

According to a report released by the Urban Institute in January, fewer than a quarter of workers 50 and older who lost their jobs between mid-2008 and 2009 found work within 12 months — much lower than the rate for younger workers.

Of course, it's not just older folks that are suffering, and what's really notable about the study is the outright despair of the unemployed. The Rutgers team reported on 1200 unemployed people:

It is hard to overstate the dire shape of the unemployed. Over the space of the 15 months we have been tracking our panel’s progress, just one-quarter have found full-time jobs. And virtually all of those jobs were for less pay or benefits, with 40% having to change fields or their career path to find employment.

One of the casualties of the Great Recession has been a core American principle since the founding of the nation — that if people work hard and play by the rules, they can get ahead. Now, the majority of the unemployed do not believe that simple hard work will guarantee success. They feel powerless, and voice little confidence in the government’s ability to help them.

They lack that confidence for good reason. Washington really doesn't care. Washington Post columnist Dana Milbank recently profiled the President's chief economic advisor, Austan Goolsbee, who has been counseling against any more stimulus, saying that would be "rash." Goolsbee's argument: 

The private sector has stabilized, profits have returned, productivity is high, American competitiveness has improved, and large sums of money have accumulated on corporate balance sheets.

Notice anything missing? Meanwhile, outside of D.C., even middle-of-the-road economists are troubled. 

Clive Crook warns in the Financial Times that "the recovery" looks like a chimera:  

One alarming possibility is that the traits the US has relied on to drive growth in the past – labour market flexibility, rapid productivity growth – might have become toxic. If the US is unlucky, traits seen as distinctive strengths are now weaknesses, and a “lost decade” of stagnation, like Japan’s in the 1990s, might lie ahead. 

Paul Krugman, quoted admiringly in Crook's piece, has a devastating graph to illustrate what a "lost decade" he's been warning us about for over two years now might look like. 

Today Felix Salmon points out that unemployment is much worse in the U.S. than in comparable nations: 

He adds:

It’s entirely intuitive to believe that structural unemployment rose significantly over the course of the recession, and that it’s now painfully high. And that the Obama Administration is, to a first approximation, doing absolutely nothing to address this crisis head-on.

In other words, the doubt and despair of the unemployed is totally justified.