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On This Labor Day, Unemployment Remains High, Workplace Security Stays Low

KENNETH R. GOSSELIN

September 07, 2009

As unemployment nationally creeps perilously close to 10 percent, people with jobs should consider themselves lucky this Labor Day.

It just might not feel that way.

Sure, there are signs that the recession is receding. Monthly job losses, although still high, are abating. Corporate profits are beginning to rebound, driving stock prices higher. Even the beleaguered housing market is showing signs of life.

But if you have a job, you are still likely looking over your shoulder. Is your company financially secure? Will someone who is paid less take your place? And will you lose more benefits, possibly threatening your retirement plans? (Read: Jobless Rate At 26-Year High)

The steady loss of workplace security that began two decades ago continues. And it's not just whether you have a job, it's actual pay. Companies have not only cut overtime, they've ordered pay freezes and even rollbacks in increasing numbers.

"Having a job is better than not having a job, but it's not as good as it used to be," said Nicholas S. Perna, economic adviser to Webster Bank.

While the gap between high-wage and low-wage earners continues to widen nationally and in Connecticut, those in the middle are getting hit especially hard in the fallout of this recession. (Graphic: Tight Fit In The Middle)

Douglas Carlson, a machine programmer and operator at U.S. Fire Arms Manufacturing Co. in Hartford, used to work five to 10 hours of overtime a week until last October and is now in the middle of a two-week furlough.

Between the lost overtime and the furlough, Carlson estimates that his annual pay has plummeted by 35 percent, from just over $80,000 to about $55,000.

"I have to continue and live and basically suck it up and figure how we can cut any corners we can," said Carlson, of Plainville, whose wife works as a nursing instructor.

In its annual Labor Day report, the Economic Policy Institute, a Washington, D.C., think tank, said that the federal stimulus package helped curtail a deeper economic decline. But unemployment is expected to remain high — with many believing that it will reach 10 percent nationally — and hold back significant growth in wages, the institute said.

"The downturn in living standards during this recession will only compound the erosion of incomes that occurred over the 2000-2007 business cycle — the only one on record in which a typical working family had less income at the end of the cycle than at the beginning," the institute wrote in its report.

According to the institute's forecasts, those workers in the middle of the income spectrum nationally are likely to see a substantial decline in average family income in 2009, plunging 5 percent to $59,241 from $63,004 in 2000, prior to the start of the previous recession.

Carlson, 53, is a prime example. In addition to cuts in pay, he said that he no longer has a 401(k) plan at work or disability coverage should he become disabled. He has medical and dental coverage, but pays a good portion of those costs.

Carlson said he has been forced to pull back spending, not going out to dinner or the movies as frequently. He and his wife have cut back on season-ticket subscriptions to the Bushnell Center for the Performing Arts and the Goodspeed Opera House. They don't take their grandchildren as many places as before.

"I look for sales and clip coupons a lot more," he said.

The nation's unemployment rate jumped to 9.7 percent in August, the highest level since 1983, with the nation shedding 216,000 jobs, a U.S. Department of Labor report Friday showed. A double-digit unemployment rate hasn't been seen in more than two decades.

Connecticut is faring better at the 7.8 percent recorded in July — the latest figure available, when the state lost 2,800 jobs.

Nationally and in Connecticut, however, the unemployment rate masks workers who have gone back to school, taken part-time employment as a stop-gap measure or have given up looking for work.

If discouraged workers and those working part time involuntarily are included, the "hidden" unemployment rate brings the national total to 16.8 percent in August. The total likely would be 14 percent for the state, based on the July unemployment figures.

Recruiters say workers who lose full-time jobs even have a tough time finding part-time positions, competing with high school students and recent college graduates unable to find their first full-time job.

"Other stop-gap measures to get back on board just are not there," said Fred Dearborn, a technical recruiter at Point Staffing in East Windsor. "They are finding they don't have the choices they would have had a year ago."

Retail and service jobs — traditionally the fallback — are scarce as consumers remain cautious about spending.

Sharon Albert of Coventry said she has a line on a part-time job as front desk manager at a company that plans birthday parties for children.

It wasn't her first choice, but she's hoping it will lead to another job. Two years ago, after she lost a concierge job at a local hospital, she went back to school to switch into the hospitality industry.

But since Albert, 62, started looking for a full-time hotel job in October, she's had no luck.

"I never ever had a hard time getting a job before," Albert said. "The competition obviously is very stiff. It's very frustrating for me."

Last week's news of slowing job losses nationally is of little solace for job seekers facing the end of severance benefits or workers worried about layoffs.

"It may be good for Ben Bernanke, but there's nothing in the numbers that alleviates the average person's anxiety," Perna said.

Carlson said he knows he's lucky to have a job. But after working for 36 years, he said, "I thought I'd be in a better position. ... I figure my retirement age is somewhere between 70 and 80."