Many of the Now Unemployed Unlikely to Ever Return to Work

The unemployment numbers released today indicate an unexpected sluggishness in the job market: payrolls shrank by 131,000 and the unemployment rate remains at 9.5%. In the week ending July 31, the number of new unemployment claims was 479,000; the total number of unemployed was 14.6 million as of July.

But looking for work has gotten unexpectedly harder in recent months because of a new trend: some companies specifically wish to exclude the unemployed from consideration when hiring.

A Florida-based recruiting company specializing in telecommunications and technology jobs posted a job opening for which the anonymous employer would not consider anyone who was unemployed, regardless of skills or qualifications. According to UPI, Howard Lawson, a recruiter for The People Place, said there is a “growing trend” of companies seeking to hire only the currently employed.

It appears that many employers now deem the unemployed as damaged goods or else as lazy and unwilling to work. To fill job openings, some have embraced “recycling” or considering for job openings only those already employed elsewhere, in addition to the old standbys of outsourcing and bringing employees into the country on a work visa. Indeed, politicians seem to recognize the harsh economic realities: the administration is training IT workers abroad in a program to help outsourcers find skilled overseas workers.

This trend of abandoning the American worker is consistent with the idea that the current recession is structural in origin, that is, with the idea that the vast majority of the now unemployed will never return to work because there simply won’t be enough new jobs created by the shrinking U.S. economy to absorb them. For decades jobs have been going abroad. There is nothing the administration can do now to bring those jobs back. Indeed, these structural changes are not new but have been at work for the last two decades or more, with fewer employees than before the onset of an economic downturn returning to the workplace following each recession because the real economy has been shedding jobs with each downturn.

Because there will be fewer jobs that do remain in the U.S., the competition for them will necessarily be fierce. This is already reflected in employers preferring to hire only those already employed, seeing them as more competitive and willing and able to work than those who have been tainted by unemployment. The logic of this is simple but undeniable—the unemployed are seen by employers as having been a part of a failure, a company that could not remain competitive in the downturn. Why should anyone give them a chance?

The changes in the economy promise to put further pressure on the middle class and to push out of reach the American Dream for many. Yet there are indications that politicians are ready to abandon the unemployed for good.

Detecting a turn away from the idea that the vast numbers of the unemployed will ever return to work, some politicians are already abandoning the unemployed, attempting to recast them in negative light as lazy and looking for a handout. In Nevada, for example, Sharon Angle (R) was quoted as saying “You can make more money on unemployment than you can going down and getting one of those jobs that is an honest job.” Such sentiment is likely only to grow as the vast reserve army of the permanently unemployed grows.

How will the permanent loss of millions of jobs impact the economy? Actually, it appears that the smaller economy that will emerge will be more vibrant and richer than ever. It all has to do with global trade and capital flows. There is a waiting in the wings to flood the U.S. because the world’s powerhouse economies must invest their giant trade surpluses somewhere, and the U.S. economy is the only viable option for such investments. This means that the smaller, leaner economy that will emerge from this Great Recession will offer skyrocketing incomes to those who manage to remain part of it, expanding the wealth of the top earners, whose spending will offset the loss of purchasing power represented by millions of permanently unemployed.