Even though the stock market has been on the rise recently and optimism is emerging that the economy may start rebounding in coming months, millions of Americans are still having trouble finding work and providing for their families. News and research highlight the many challenges working poor families and communities face today. Food Pantries are facing unprecedented need for help. More than 30 million Americans today receive help from the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). Homelessness is on the rise. Nonprofits that help low-income families are in trouble. The foundations that typically serve as the safety net for nonprofits are struggling. As a result of mounting needs and inadequate assistance to meet those needs, people are turning to family for help.
Even though the outlook for markets may be brightening, the outlook for workers – particularly those at the lower end of the income ladder – may not be so bright. How could a recession end without improvement in the labor market? The end of recessionary periods do not correlate with immediate increases in employment opportunities because the starting and stopping points of recessions are defined by trends in GDP, not by changes in unemployment rates. Recessions are deemed to have ended when sustained GDP growth is observed. This growth can occur due to a range of factors – like increases in productivity – without increasing overall employment rates. Thus, unemployment can increase or remain high early on during an economic recovery.
The previous recession that lasted from March 2001 to November 2001 exemplifies this seeming contradiction. According to Bureau of Labor Statistics data, the seasonally adjusted unemployment rate among adults 25 and older without a high school degree rose from 6.8% in March 2001 to 8.0% in November 2001. Yet, the unemployment rate among this group peaked in 2003 and did not fall below 8.0% until 2005. Similarly, the unemployment rate for adults 25 and older with a high school degree increased during the recession of 2001 to 5.0% and remained at or above that level until late 2004.
In March 2009, the unemployment rate was 13.3% for adults without a high school degree and 9.0% for those with a high school degree. Even if GDP and the Dow rise in the latter half of 2009, we should expect jobseekers at the bottom of the income distribution to continue to struggle to find work. Safety net programs, food pantries, and social service providers should be expected to see historically high levels of demand well into 2010 and 2011, maybe even beyond. In short, rosy stock market news and initial signs of turn-around may distract the news media, but they should not divert our attention from the very real investments we need to continue to make in education, training, work supports, and aid to low-skill jobseekers unable to find employment.