Is a Lean Economy Turning Mean?

Mar.01, 2008 in Market Outlook

OAKLAND, Calif. — NICOLE FLENNAUGH has a college degree, office experience and the modest expectation that, somewhere in this city on the eastern lip of San Francisco Bay, someone will want to hire her.

But Ms. Flennaugh, 36, a widow, cannot secure steady, decent-paying work to support herself and her two daughters. Nearly two years after she was laid off as a customer service representative at the Educational Testing Service, and even after applying for dozens of full-time jobs, she has been getting by with occasional stints as an office temp.

“You’re used to making $17 an hour with benefits, and now you have to take any job for $8 an hour,” Ms. Flennaugh says. On a recent afternoon, she sat in front of a computer terminal at an employment center in a gritty part of town, scrolling dejectedly through online job listings while sending another batch of applications into the ether.

“I’ve literally sat and cried, but my friends with double degrees are doing worse,” she says. “It’s the economy. It’s really bad.”

Now, it’s getting tougher — particularly for those at the lower rungs of the economic ladder, and especially for African-Americans like Ms. Flennaugh. As the economy slows and perhaps slides deeper into a recession that may already be under way, communities like this — cities that have long struggled with a shortage of jobs — see work becoming scarcer still.

Across the nation, the labor market has been deteriorating. Many companies, long reluctant to add workers, are hunkered down and waiting for improved prospects, engaged in what Ed McKelvey, a senior economist at Goldman Sachs, calls “a hiring strike.” Americans with jobs are taking cuts to their work hours; those without jobs are staying out of work longer, or accepting positions that pay far less than they earned previously.

Teenagers are struggling to land minimum-wage jobs at fast-food restaurants, because those positions are increasingly being filled by adults. And those with poor credit are finding that this can disqualify them from getting a job.

IN many communities, dreams of upward mobility are yielding to despair and the grim realization that the economy — not strong for less-educated workers even when it was growing — may now be shrinking, making it tougher than ever to find a job.

Indeed, the increasingly anemic job market comes on the heels of six years of economic expansion that delivered robust corporate profits but scant job growth. The last recession, in 2001, was followed by a so-called jobless recovery. As the economy resumed growing, payrolls continued to shrink.

Even as job growth accelerated in 2005 and 2006 before slowing last year, it was not enough to return the country to its previous level. Some 62.8 percent of all Americans age 16 and older were employed at the end of last year, down from the peak of 64.6 percent in early 2000, according to the Labor Department.

“The economy never got its groove back after the tech bubble burst,” says Mark Zandi, chief economist at Moody’s Economy.com. “We’re still feeling fallout from the collapse of the tech economy and the accounting scandals. There are still psychological scars for the managers affected. Managers are less interested in taking risks.”

In many metropolitan areas, overall employment remains below levels reached before the last recession; the list includes New York, Chicago, Detroit, Milwaukee and Buffalo, as well as Boulder, Colo.; Spartanburg, S.C.; and Topeka, Kan., according to Economy.com.

As the presidential contenders Hillary Rodham Clinton and Barack Obama crisscross Ohio ahead of its Democratic primary on Tuesday, they are stopping in many cities on that list — Canton, Cleveland, Dayton, Toledo. They are focusing on bread-and-butter economic issues, promising to increase the minimum wage, extend unemployment benefits and generate new jobs.

Oakland, long known as the blue-collar sibling to the aristocratic San Francisco across the bay, is among the metropolitan areas that never fully recovered from the last recession, with fewer jobs today than in March 2001, according to Economy.com. The technology boom of the 1990s and the real estate bonanza of more recent years created fewer jobs and less wealth here than they did in the moneyed enclaves like Silicon Valley. Yet if Oakland missed out on the festivities, it is already feeling the pullback.

“There’s more competition for every job,” said Gay Plair Cobb, chief executive of the Oakland Private Industry Council, a job training organization. “People are getting discouraged and depressed.”

Home to about 400,000 people, Oakland is enormously diverse, with blacks making up 36 percent of the population, Hispanics 22 percent and Asian-Americans 15 percent, according to the 2000 census. The city is racked by stubborn poverty, with one-fifth of all households living on less than $15,000 in annual income, according to the census.

http://www.nytimes.com/2008/03/02/business/02jobs.html?pagewanted=4&_r=1

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