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Unemployment Bulletin Index

If you've been unemployed you already know this, but if you haven't, here's a news flash: Coping with prolonged joblessness is hugely demanding. It requires deep reservoirs of fortitude, faith, patience, courage and self-control, traditional virtues generally accorded high regard in our nation's pantheon of values. Of course, we're a country that values hard work, and that's as it should be. But don't our values also dictate respect for the efforts of the struggling unemployed?

The two American economies — the Big Money economy and the Average Working Family economy — will continue to diverge. Corporate profits will continue to rise, as will the stock market. But typical wages will go nowhere, joblessness will remain high, the ranks of the long-term unemployed will continue to rise, the housing recovery will remain stalled.

In the new economic paradigm, wages are compressed among full-time salaried workers. And even worse from a societal standpoint is the rise of “freeters” or workers stuck in temporary jobs. Some of them can work for the same company for a very long time, but they are  paid substantially less, and do not have chances to move into the hierarchy of permanent workers. Many become freeters right out of college, and are never able to get back on track with their peers, since companies  prefer to hire new college or professional school graduates into their entry level positions.

Contents

Highlights

[Oct 24, 2011] Economists See More Jobs for Machines, Not People

NYTimes.com

The automation of more and more work once done by humans is the central theme of “Race Against the Machine,” an e-book to be published on Monday.

“Many workers, in short, are losing the race against the machine,” the authors write.

Erik Brynjolfsson, an economist and director of the M.I.T. Center for Digital Business, and Andrew P. McAfee, associate director and principal research scientist at the center, are two of the nation’s leading experts on technology and productivity. The tone of alarm in their book is a departure for the pair, whose previous research has focused mainly on the benefits of advancing technology.

Indeed, they were originally going to write a book titled, “The Digital Frontier,” about the “cornucopia of innovation that is going on,” Mr. McAfee said. Yet as the employment picture failed to brighten in the last two years, the two changed course to examine technology’s role in the jobless recovery.

The authors are not the only ones recently to point to the job fallout from technology. In the current issue of the McKinsey Quarterly, W. Brian Arthur, an external professor at the Santa Fe Institute, warns that technology is quickly taking over service jobs, following the waves of automation of farm and factory work. “This last repository of jobs is shrinking — fewer of us in the future may have white-collar business process jobs — and we have a problem,” Mr. Arthur writes.

[Sep 17, 2011] Even Harvard couldn't protect me

"We live in a society where it's hard to maintain self-respect if you don't have a job," Kwame Anthony Appiah, philosopher at Princeton, said in a recent radio interview, and I can certainly identify. All of my life I've been an achievement junkie. I have two Harvard degrees, practiced law at elite Manhattan firms, and wrote and published two novels, among other things. But of all my accomplishments, by far the most impressive is absent from my résumé: It's my more than two-year stint of job searching and unemployment.

If you've been unemployed you already know this, but if you haven't, here's a news flash: Coping with prolonged joblessness is hugely demanding. It requires deep reservoirs of fortitude, faith, patience, courage and self-control, traditional virtues generally accorded high regard in our nation's pantheon of values. Of course, we're a country that values hard work, and that's as it should be. But don't our values also dictate respect for the efforts of the struggling unemployed?

Two years of job hunting has required infinitely more of me than any of my lauded past achievements. And I, of course, am among the relatively fortunate, with a cushion of savings and a supportive group of friends. And here is what I think: If the experience is still this hard for me, how much harder must it be for the millions who lack these things?

There is a distinct Groundhog Day quality to days spent looking for work: Write letters. Prepare résumés. Search job boards. Make phone calls and brainstorm over coffee. Sleep. Get up. Repeat. After sending off my materials, I often hear nothing back. I've long since lost count of the number of jobs I've applied for.

As an "older worker" -- When did that happen? -- I try to ignore a drumbeat of statistics telling me I face an uphill battle. It's hard not to feel worn down, to succumb to "learned helplessness," our innate tendency to give up when our efforts fail to yield results. Still, like millions of others, day by day I keep going.

My exertions often seem strangely invisible, not only to my family and friends but increasingly to me -- an experience that turns out to be widely shared in job-loss land. And this is just the tip of the iceberg. As Atlantic journalist Don Peck recounts in "Pinched," his sobering account of the changes wrought by the Great Recession, studies show "a growing isolation, a warping of family dynamics, and a slow separation from mainstream society" among the long-term unemployed. Strikingly, no other circumstance triggers a larger decline in well-being and mental health than involuntary joblessness. Only the death of a spouse compares.

...At the start of this year, the average unemployment duration of more than nine months was longer than it's been since the Bureau of Labor Statistics began tracking the figure in 1948, according to Peck.

And yet, daunting as these numbers may be, they only hint at the human suffering that they reflect. In his 2010 book "The Honor Code," Appiah places honor at the heart of what it takes to lead a successful life, noting that throughout history, societies have adopted guidelines for how people "can gain the right to respect, how they can lose it, and how having and losing honor changes the way they should be treated." The result: "[P]eople in an honor world automatically regard those who meet its codes with respect and those who breach them with contempt."

This stark dichotomy -- between respect and contempt -- got me to thinking. You don't have to be a mathematical genius to see that when there are six job seekers for every job, it's simply not possible for everyone to find work. And in fact, as others have noted, the reality is even tougher on the unemployed than these numbers suggest. For one, they (we) are competing for positions not only with other unemployed workers but also with applicants already in the workforce who are looking to move on. They (we) are also contending with subtle -- and not so subtle -- biases against the unemployed, including the proliferation of "unemployed need not apply" caveats on job ads for positions ranging from electrical engineers to restaurant managers. Thanks to my legal background, this shocked me less than it did some of my friends. I knew that current laws don't prohibit discrimination against the jobless.

So how is it that so many have come to disdain the unemployed? To equate unemployment with failure and shiftlessness? If the barometer of popular culture is any indication, this wasn't always so. In the 1962 film classic "A Touch of Mink," plucky all-American Cathy Timberlake (aka Doris Day) is on the way to collect her unemployment check, when a chauffeured limousine splashes her with mud. It's Cathy Timberlake -- not the feckless industry titan played by Cary Grant -- who represents the traditional American values that in the end carry the day. Firmly planted at the dark pole of the film's moral compass is the creepy unemployment office bureaucrat who alternately taunts Timberlake for taking government money and hits on her. The film has plenty of disdain for the titan and the bureaucrat and plenty of sympathy for Timberlake.

[Jun 26, 2011] The Social Cost of the Loss of Job Stability and Careers

“mal-employment”: many baby-sitters, sales clerks, telemarketers and bartenders are overqualified for their jobs. Ambrit wrote:

older people are too much trouble.” When pressed on that statement, she continued, “You older folks know too much. You call us out on the B—S — that every big outfit uses to keep the kids in line. Face it, you’re a threat to the system.” Evidently, overqualified also means having a social conscience today. I do pity the young folks today though. They’re growing up in a new Dickensian Age.

This is a very insightful comment but reality is even worse. Not only mere competence and life experience typically represents a threat to the system, but system is oriented on selection of only "kiss up, kick down" personalities. This is an interesting nuance that I would like to highlight.
The management positions in large established corporations for example corporate IT organizations that I know best, are often occupied not so much by psychopaths (actually I think in IT they are more common among female managers) but RWA (right wing authoritarians) types
See http://en.wikipedia.org/wiki/Right-wing_authoritarianism
RWA often form multilevel clusters when most of subordinates of a particular "high-fly" RWA are also RWAs. And they are not only incompetent, they also try to surround themselves with loyal, incompetent subordinates who also belong to RWA or in common language "kiss up kick down" personalities. Only those are hired or promoted.
And when I say incompetent, I really mean it. For example, I know about a real story of the manager of Unix group in a major corporation who was unable to understand that Linux executable can't be run directly on a different then Intel architecture without recompilation. Such people are often a dream targets for consulting firms as well as HP, IBM and other major supplies of hardware and this one really was :-).
I would like to stress it again that such people hire those who don't threaten them and that means C-class RWA types. After a decade of such jerks at the helm the whole department becomes more absurd then any Dilbert cartoons. This is an interesting and poorly understood variant of "corporate socialism".

naked capitalism

McKinsey had Yankelovich survey the attitudes of young people a decade ago, and even then, the results were pretty disturbing. Yankelovich projected that college graduates would average 11 jobs by the time they were 38 (!), yet found they were demanding of their employers, wanting frequent feedback (as in lots of attention) and quick advancement. But if you are not likely to be around for very long, no one is likely to want to invest in you all that much (McKinsey, which was competing for a narrow slice of supposed “top” talent and not offering Wall Street sized pay opportunities, might have been more inclined to indulge this sort of thing than other employers).

But these rapid moves from job to job, and now a much weaker job market, are producing behaviors that old farts like me find troubling. One is rampant careerism. I’ve run into too many polished people under the age of 35 where the veneer is very thin. It isn’t hard to see the opportunism, the shameless currying of favor, and ruthless calculations of whom to help and whom to kick, including throwing former patrons under the bus when they are no longer useful (I can cite specific examples of the last behavior). The world has always had its Sammy Glicks, but now we seem to be setting out to create them on a mass basis.

The economic effects are also not pretty. A 30 year mortgage made sense when people would spend a decade or more with a single employer. And more frequent job changes means not only more total time unemployed over one’s working years, but also the very high odds of falling out of a highly or even moderately paid career path to a much lower one as the work place continues to be restructured.

A New York Times piece tonight describes the latest stage of this sorry devolution: “job jugglers” who hold down multiple part time jobs to make a living. This sort of thing used to happen only to lower income people, artists, or people who live in resort areas. The article makes clear that this is often a hand-to-mouth, high stress existence, although the interviewees put a brave face on it. And we aren’t necessarily talking having one income source in the days and another in the evenings: three of the individuals featured had four jobs. Even then, they barely cover their expenses.

Yet it could indeed be worse:

Still, Ms. [Mia] Branco, who graduated magna cum laude with a degree in musical theater from American University in 2009, says she feels lucky to be employed at all. “The majority of the jobs I have right now are because people were laid off and they didn’t want to hire back full-time employees,” she said. “My willingness to have a hodgepodge schedule makes me more
marketable.”

But the “marketable” benefits are only short term.

A national study by the Johns Hopkins Institute for Policy Studies found that young women who worked primarily in part-time jobs did not make higher wages in their 30s than in their 20s…The reason is that part-time jobs generally provide fewer training opportunities and often don’t put workers on a track for advancement.

And many of these jobs are clearly stopgaps:

More college graduates are working in second jobs that don’t require college degrees, part of a phenomenon called “mal-employment.” In short, many baby-sitters, sales clerks, telemarketers and bartenders are overqualified for their jobs.

Last year, 1.9 million college graduates were mal-employed and had multiple jobs, up 17 percent from 2007, according to federal data. Almost half of all college graduates have a job that doesn’t require a bachelor’s degree.

I see this in my own building. One of the new doormen, a clean cut, high energy fellow, is a college graduate who is going to work on his graduate degree at night. One who has been here about a year also went to college. That was unheard of until recently.

Even though the evidence is that these jugglers would do better financially and probably in terms of lifestyle if they got on a career path, some seemed to have been imprinted by their multi-job routine and seemed loath to give it up, even though they recognized that it is not conducive to having a family.

These part-time jobs may just be another feature of this recession, but the odds are that it will become yet another aspect of the “new normal”.

The Social Costs of Deindustrialization  by John Russo and Sherry Lee Linkon, Youngstown State University

Center for Working-Class Studies

 (First appeared in Manufacturing a Better Future for America, edited by Richard McCormack)

Yet America still makes things. While much of today's economy could be described as either a service economy or, to use a buzz phrase, a "knowledge economy," manufacturing continues to play a key role, employing 9 percent of all U.S. workers (12.3 million) and 9 percent of all scientists and engineers. Manufacturing produces 12 percent of the total gross domestic product and is responsible for 60 percent of the nation's research and development.11 Stephen Cohen and John Zysman argue that "we are experiencing a transition not from an in­dustrial economy to a service economy, but from one kind of industrial economy to another."12 In other words, while manufacturing continues to be a major part of the U.S. economy, the quality of industrial jobs has changed in significant ways, and this combines with ongoing major job losses in the manufacturing sector to create a real crisis not only in the economy but in the quality of American community life.

This is not just an American phenomenon. Across the developed world and increasingly in developing countries, social, political, tech­nological and economic changes have enhanced the ability of companies to move work to wherever labor is cheapest. So even in China, which is widely seen as the winner in the global battle for industrial jobs, workers have been displaced, first by privatization and more re­cently by companies moving factories to Indonesia and other countries where they can pay even less and face fewer environmental regulations. While our focus is on the American situation, we must keep in mind that deindustrialization reflects changes in the global economy.

The social costs of deindustrialization are significant, long­lasting and wide­ranging, if for no other reason than sheer numbers. The deindustrialization of the 1970s and 80s was "cataclysmic"; more than 32 million jobs were lost, according to Bluestone.13 More recently, Howard Rosen has found that between 1995 and 2004, almost 700,000 firms closed each year, affecting 6.1 million workers, and an additional 1.7 million firms contracted annually, affecting another 11.8 million workers.14 But job loss does not affect individuals only, although it touches many who, having dedicated their lives and sometimes their health to employers, now feel betrayed and economically expendable. As a laid­off Johnson Controls worker in Louisville, Ky., explained, "I've always been a hard worker....You go in there and give a guy a day's work for a day's pay." But, he lamented, the company didn't see it that way: "I gave them 110 percent. They paid me for 110 percent but they did everybody out there wrong."15 Another laid­off worker suggested that U.S. companies were "letting the people of America down," and this would "eventually come back to them."16

Deindustrialization undermines the social fabric of communities, states and the nation. The social costs of deindustrialization include the loss of jobs, homes and health care; reductions in the tax base, which in turn lead to cuts in necessary public services like police and fire pro­tection; increases in crime both immediately and long­term; decaying local landscapes; increases in suicide, drug and alcohol abuse, family violence and depression; declines in nonprofits and cultural resources; and loss of faith in institutions such as government, business, unions, churches and traditional political organizations.

Even when workers find new jobs or when communities succeed in bringing in new employers, these new jobs often pay less, offer fewer benefits, are less likely to provide union protections and, in many cases, are temporary, contingent or part­time. Finally, widespread job loss, especially in communities that rely on just one or two industries, un­dermines the community's identity and sense of competence. Deindus­trialized communities too often become sites of persistent struggle, creating a cycle of failure from which it is difficult to escape.

Economic Struggle as a Social Cost

Whether caused by offshoring, outsourcing, new production methods, technological change or privatization, and regardless of in­dustrial sector, deindustrialization creates economic struggles that affect both individuals and their communities.17 While most measures of deindustrialization emphasize how many workers have lost jobs, the real figures both of people affected and economic costs are much larger. Many of them cannot be measured. Individual workers and their fam­ilies face several specific economic challenges because of unemploy­ment - challenges that are exacerbated when unemployment is concentrated by large­scale plant closings or industry cutbacks. But these individual struggles are just part of a large, complex economic web that shares the social costs of economic struggle with whole com­munities. Further, because communities in economic distress often turn to state and federal governments for assistance, the social costs of dein­dustrialization affect every citizen in the nation.

Job loss creates economic crises for workers and their families as they lose wages and often benefits - losses that can create long­term financial difficulties. This is especially true when unemployment lasts more than six months. Over the past three decades, as American in­dustries have declined, long­term unemployment has become a larger portion of overall unemployment. In 1979, 8.6 percent of the unem­ployed had been out of work for more than six months; in 2005, 19.6 percent experienced long­term unemployment. Since 2001, this has become particularly significant as a result of "jobless recoveries" that varied from historical, cyclical patterns of unemployment. After six months, many individuals have exhausted government assistance and largely depleted their savings. Many resort to increased personal and credit card debt, reducing retirement savings, and, if necessary, incur­ring relocation expenses.18

Long­term unemployment occurs most often in communities where many people have lost jobs due to plant closings. Local economies simply cannot absorb so many displaced workers, and wide­spread unemployment persists, often for years.

... ... ..

While the economic crisis associated with job loss may not hit immediately, before long even workers who were earning good hourly wages (and who therefore may have some accumulated savings) en­counter difficulty securing basic needs like food, clothing, utilities and transportation. Many working­class families regularly live paycheck­to­paycheck, and the loss of a job can throw them quickly into poverty. In Flint, the local United Way reported a 25 percent increase in calls for assistance during the months after GM closed its plant there.23

Unable to keep up with mortgage payments, or forced to move in search of work, some families lose their homes. While this can occur with any type of unemployment when major local employers shut down, local housing markets can become glutted, making it as hard to sell a house as it is to find a new job, and for the same reasons. In Rock Island, Ill., after International Harvester, John Deere and Caterpillar all closed plants or reduced their workforces, the unemployment rate was more than 10 percent, a number of houses had been abandoned and home prices fell by about 20 percent.24 For many working­class households, the home represents the family's largest and in some cases its only investment. Losing that home due to foreclosure or losing money on the sale of that home represents a significant reduction in the family's worth.

Of course, jobs provide more than just wages to families. Despite COBRA programs, many displaced workers and their families lose ac­cess to health care. A recent report by the Urban Institute predicts that each time the unemployment rate rises by one percentage point, an­other 1.1 million people become uninsured.25 While some workers re­tain some form of health insurance when they are laid off, they may nonetheless find themselves unable to afford co­pays and deductibles and so avoid seeking treatment. For others, the loss of the job means losing both insurance and the ability to pay out­of­pocket health care costs. Along with exacerbating health problems, lack of access to health care creates an additional source of stress. As a laid­off worker from the KEMET factory in Shelby, N.C., explained in 1999, "We're up a creek [if] anybody gets sick or dies. There's just that little feeling in the pit of your stomach like please don't let disaster come."26

Industrial jobs also brought the promise of good pension pro­grams. When factories close, the best scenario for displaced workers is that they would stop accruing pension funds and have to work for more years in another job. In their study of workers laid off from two plants near Louisville, Ky., Joy Hart and Tracey K'Meyer explain that "the reward for hard work in brutal conditions was not just high wages, which people felt they deserved, but the promise of a comfortable and early retirement. These workers felt robbed of the latter, coloring the lessons they would take from the whole experience."27

Bitterness and a longer worklife are only part of the problem. For many workers, companies ultimately defaulted on pension programs altogether. In some cases, pension programs have been underfunded, and some companies have used bankruptcy to escape their pension ob­ligations. When this occurs, the Pension Benefit Guarantee Corpora­tion (PBGC) steps in to provide payments. While workers affected by such moves may still receive pension payments, the value of those pay­ments can decline precipitously.

For example, a typical steelworker with 30 years of service in the 1980s might receive about $1,800 a month, including a $1,000 pension payment, $600 for health care and a $200 shutdown bonus. But by de­claring bankruptcy, some steel companies shifted the burden to the PBGC, which guarantees only 80 percent of the pension benefit and provided no other benefits. Thus, the PBGC would pay the same worker just $800 a month, less than half of what he had been promised. That $800 would have to cover health care costs as well as any other household expenses.28 In some cases, displaced workers have been of­fered early retirement. But as pension programs falter, many older workers must find new jobs, often in the low­wage retail and service sector. This combined with the move to defined contribution pension plans, reduced access to health care and the recent declines in housing and stock values, makes "early retirement" a misnomer. Worse, this pattern not only reduces the standard of living of these workers, it also reduces opportunities for young workers to enter the labor force.29

Dramatic hardships for workers and their families filter directly into communities. The sources of economic challenge for cities are a bit different, but as with families, communities lose their source of in­come: taxes. Cities rely on local sales, property and income taxes to provide various community services. Large­scale plant closings drasti­cally reduce cities' budgets, and this is especially true for smaller cities where a single employer or industry dominates. The closing of a major local employer often creates a ripple effect.

As other local businesses lose customers after a plant closing, they, in turn, lay off workers. In Anaconda, Mont., for example, within two months of the closing of ARCO, other local businesses had laid off about 20 percent of their workers. Over time, many local businesses simply closed.30 That can create a cycle of fiscal problems for cities, as Camden, N.J., discovered when it began to lose jobs in the 1950s. Fed­eral assistance helped for a while. Then the state stepped in, but ulti­mately, the city grew increasingly isolated. As Howard Gillette, Jr. writes, "Disinvestment is not a one­time process. It has cumulative effects."31

The loss of tax income for cities creates a variety of social problems. Among the most obvious cumulative effects of plant closings are cut­backs in local services. From police and fire protection to maintenance of city parks and streets to garbage collection, cities must cut their costs when they lose a significant portion of the local tax base. Those cuts create further problems. Cuts in police and fire protection make it dif­ficult to respond to the increases in crime or waves of arson that often accompany unemployment and the threat of losing homes. Lack of maintenance or reduced garbage collection makes the local landscape look run­down and unattractive, which in turn makes it difficult to at­tract new businesses or residents. These changes can bring down prop­erty values, which reduce taxes even more. Deindustrialized cities often find themselves trapped, without the funds to improve their circum­stances and, as Gillette points out about Camden, N.J., with "few tools available to alleviate its permanent fiscal crisis."32

Crime increases in deindustrialized communities for several rea­sons and over a long period of time. While some crime occurs as laid­off workers run out of money and options, and decreased police presence contributes to the problem, crime is a long­term problem for such communities. Criminologists have found that street crimes in­crease as unemployment spreads, but after a lag period, more serious criminality can develop.33

In the 1990s, a decade or more after Gary and Youngstown were both hit by deindustrialization, the two cities traded back and forth the embarrassment of having the highest per capita murder rates in the United States.34 During that period, criminal justice experts deter­mined that most of the murders in the Youngstown area were being committed by young adults who were born between 1977 and 1984, the most intense period of the deindustrialization. But for the mill clos­ings, Youngstowners of this age might have been earning a decent liv­ing in the steel industry. Having a reputation for crime also creates a tough challenge for local boosters in bringing new jobs to the area.

In order to preserve police and fire protection, many cities cut back on maintenance. As a result, local streets may not be repaired reg­ularly and street lighting may be cut back. Landscaping in pedestrian areas may not be maintained or cleared of trash quite so often. All of this creates a kind of "broken window syndrome" in which decay begets more decay. Such problems are often exacerbated by other economic costs.

When companies abandon factories, they often leave behind sig­nificant soil and water pollution. This can create large swaths of unus­able or undesirable land. In Youngstown, for example, much of the area where the steel mills once stood remains empty 30 years after the structures were torn down. Although Environmental Protection Agency regulations push companies to clean up these areas, such rules sometimes backfire. When Anaconda, Mont., was named a Superfund site, selling homes and bringing in new industries became even harder, because no one wanted to buy a home or build a business in an area known to be polluted with dangerous toxins. While the community eventually built a golf course on the brownfields near the abandoned mines, the course has specially­trained workers to retrieve golf balls that land in areas where parts of the mine are still exposed, and other rules strive to ensure that golfers don't contribute to erosion that would release toxic chemicals into local drinking water.35

But a site doesn't need toxic chemicals to scare away visitors or new residents. The downtown areas of many former industrial towns fell into decay and gained a reputation for crime and ugliness when the local economies declined. Bryant Simon describes how this decline occurred in Atlantic City as that city struggled economically in the 1960s:

 "With department stores and small shops closing, taking people off the sidewalks, the few middle­class        patrons who did come downtown to see a film hustled back to their cars when it was over and raced home....

Without customers milling around, storeowners locked up before dark and turned their shops into fortresses. The few window shoppers had to peer through metal gates.

German shepherds barked back at them as they glanced at shoes and cabana wear. The dogs and bars replaced the eyes of the street, the free­form dance of people that the influential urbanist Jane Jacobs has argued kept  traditional mixed­use urban areas, like Atlantic City's Main Street, safe and alive."36

Deindustrialized communities across the country have witnessed similar transformations. When small shops close because of lost busi­ness, their boarded­up facades create a sense of abandonment, even though neighboring businesses may still be operating. As Simon sug­gests, this creates a ripple effect. Decades later, cities may still struggle to entice area residents downtown. In Youngstown, for example, nei­ther new businesses and entertainment venues nor a crackdown on street crime has persuaded some residents of nearby suburbs that the city is a safe and attractive place to spend an evening. Yet again, disin­vestment becomes cyclical. If people won't patronize downtown busi­nesses, the area will continue to struggle long after real problems may have been solved.

Decay affects residential neighborhoods, as well. When displaced workers cannot keep up with mortgage payments or move away in search of work, their abandoned homes create problems for neighbors and the city. In some cases, drug dealers have taken over abandoned properties. Elsewhere, abandoned homes have been looted and van­dalized. Any items worth selling, such as moldings, light fixtures, cop­per pipes, and old­fashioned door knobs, have been stolen, making the home less attractive to any potential buyer. Eventually, such prop­erties become not only unsightly but also dangerous, and they must be demolished. This cost is often borne by cities, which can ill afford such additional expenses.

In some communities, people have turned to an alternative "solu­tion": arson. As economic distress increases, homeowners who are threatened with foreclosure have a strong economic incentive to en­gage in arson, because that may be the only way to hold on to some of their investment. Similarly, neighbors in areas where many homes have been abandoned and are falling into disrepair may view arson as a way of protecting their own property values.37 This is one of the reasons why Detroit became known as the arson capital of the world.

In some cases, the declining tax base of deindustrialization directly undermines a city's ability to redevelop. In Ohio, city governments use property taxes to repay loans for development projects, but this creates a double trap. As property values in deindustrialized areas decline, loans taken out 10 years ago for redevelopment projects are harder to repay today because the city takes in less tax money but owes the same amount. Moreover, state law requires voters to approve property tax hikes to pay those loan costs, and workers who have experienced job loss are not likely to support new taxes. Thus, Ohio cities like Cleveland face an additional challenge in creating economic development.38

... ... ..

Job Loss and Health Problems

Deindustrialization and job cuts often lead to long periods of un­employment, intermittent employment and increased underemploy­ment, and the effects transcend simply the loss of pay, medical benefits and purchasing power. Financial strain creates stress, depression and family tensions, which can manifest in a variety of ways, from increased use of drugs and alcohol to suicide and domestic violence. At the same time, unemployment correlates with increased physical health prob­lems. Reduced access to health care makes it less likely that displaced workers and their families will receive appropriate care. The mental and physical health costs of deindustrialization do not harm only pa­tients; increased demand for health care combined with decreased eco­nomic resources leads to health care workers and systems that are overburdened and ultimately unable to meet the community's needs.

Displaced workers, especially primary breadwinners, are likely to feel significant pressure and anxiety about providing for their families. But job loss causes more than just financial distress; work plays a key role in shaping individual identity and social relations. The loss of work can disrupt an individual's sense of self and his or her value and com­petence. As Al Gini writes, "To work is to be and not to work is not to be."42

Even when clear external reasons exist for layoffs, individuals may internalize the loss, blaming and doubting themselves. Given that job loss undermines both financial and personal security, it's not surprising that many studies have shown that unemployment correlates with higher levels of anxiety and depression.43 A 1988 study showed that workers displaced by the closing of an Indiana RCA plant reported sig­nificantly higher levels of symptoms of depression. While 5 percent of employed workers indicated on a survey that they "very often" felt "hopeless about the future," 38.2 percent of the displaced workers gave the same response.44 More than half of physicians surveyed in the south­suburban area of Chicago indicated that they were seeing higher rates of alcoholism after a series of plant closings.45

While it might be expected that men struggle more than women with the loss of work - given their traditional role as breadwinners and the image of masculinity associated with some industrial jobs (such as steel making) - studies show that women, especially single mothers, display more symptoms of depression and anxiety after being laid off.46

Plant closings limit workers' economic opportunities, and "anxiety, depression, and other forms of anguish may be the normal result of rational calculation of these life chances," according to Hamilton.47 Finding a new job does not entirely alleviate these fears, because the experience of being laid off can generate persistent fear about losing the next job. The security that workers once felt, especially those who worked for local companies that seemed to be dependable employers, disappears.

These problems are exacerbated by the loss of social networks that come with deindustrialization. Workplaces provide connections for most people that are built on shared experience and daily interaction. Many workers describe their co­workers as being "like family." For many, the workplace becomes a site of their most intimate relationships. When plants close, workers lose this easy day­to­day interaction. Feel­ings of shame, anger and sadness may make it difficult for co­workers to maintain close ties once their shared work disappears. To lose such networks during a time of personal crisis is doubly hard. Displaced workers without good social support networks show higher rates of both physical and mental illness.48 For a significant number of individ­uals in a single community to lose a major support system at one time is devastating.

Job loss also correlates with increases in family violence. Perrucci found that almost one­third of displaced workers (31.7 percent) indi­cated that the financial strains of unemployment were undermining marital relationships. Job loss also undermines men's feelings of self­sufficiency and disrupts household structures. Such tensions related to gender roles increase the probability of domestic violence.49 A 2002 study found that the risk of domestic violence increased 30 percent when a man's contributions to household income declined and in­creased 50 percent for every period of unemployment.50 This proba­bility is increased even further when economic distress exists throughout a community.51 Increases in interpersonal violence may not be limited to the family. According to Steve May and Laura Mor­rison, "observers have begun to note the relationship between dein­dustrialization and workplace (and domestic) violence, workplace litigation and workplace stress and injury."52

Laid­off workers also experience declines in physical health. Stud­ies consistently report that physical health problems, such as headache, high blood pressure, cardiovascular disease and digestive problems, as well as mortality rates, increase when people lose their jobs. Increased death rates result from disease as well as from suicide and accidents.53

As M.H. Brenner has shown, in cross­cultural studies conducted over the last 25 years, unemployment contributes to elevated mortality rates.54 These effects can appear quite quickly: within a year after a major mine closing in Lewis County, Wash., the county public health office reported that it was already seeing increased rates of death due to heart disease as well as an increase in the death rate for people be­tween ages 25 and 44.55

When unemployment is combined with other problems associated with economically­struggling communities, such as poor housing, in­creased levels of drug use and higher crime rates, the result is what the Executive Intelligence Review terms "death zones" - areas where the death rate for various age groups exceeds the national average.56

Health problems caused by deindustrialization also affect local clin­ics and hospitals, and this may reduce access to health care for everyone in the community. Public hospitals, which provide care for patients in financial need, including the poor and unemployed, feel the strain when demand from such patients increases. These hospitals already struggle to provide care as they face cuts in Medicare reimbursements and increased demand as the percentage of Americans without health insurance rises. Add increased demand from a significant number of laid­off workers and their families, and they face a serious crisis.

Hospitals have attempted to address the financial strains by cutting services and staffing, including emergency rooms, which further re­duces both access and quality of care, but sometimes even these cuts are not enough. A 2005 report shows that public hospitals in cities and the surrounding suburbs, especially lower­income suburbs, are already closing at significant rates.57 While these closings may not be traced di­rectly to deindustrialization, they illustrate the connection between eco­nomics and public health.

A recent report by the Urban Institute suggests that the problem will only worsen, as rising unemployment could add hundreds of thou­sands of children and adults to state and federal health programs, re­quiring an increase of $3.4 billion for Medicaid and the State Children's Health Insurance Program. Of the additional money needed, $1.4 billion would come from the states.58

Deindustrialization Undermines the Quality Of Jobs for Everyone

Although unemployment in deindustrialized areas often remains high for a number of years after major plant closings, many workers do find new jobs. What is too often left out of this discussion is any con­sideration of how old and new jobs compare or how declines in large­scale manufacturing and industrial unions have affected the quality of jobs in other sectors.

When so many steelworkers in Youngstown lost their jobs in the 1980s, anyone with a pickup truck and toolbox could move into con­struction. The flooding of the labor market with displaced steelworkers reduced employment opportunity and wages for union contractors and their employees. Called "independent contractors," the displaced steelworkers became part of an underground economy that evaded government regulation, especially in relation to occupational safety and health and workers' compensation.59

Deindustrialization harms workers and communities not only by eliminating existing jobs but also by undermining the quality of the jobs that remain, and when families and communities rely on lower­quality jobs, there are social as well as economic costs.

Conservative commentators and traditional economists often argue that the job losses associated with plant closings and widespread declines within specific industries reflect larger trends that are part of a "natural" economic change. Among the most common variation of this argument has been the claim that the manufacturing economy is giving way to a service economy. But this shift has contributed to the nation's growing inequality. Between 1979 and 2005, the employment share of goods­producing industries dropped by over 11 percent while the service sector grew by almost the same amount. Many of the job losses were in high­paying sectors, including manufacturing, that have been affected by deindustrialization.60 Employment gains were made in the low­wage and benefit service sector. This may explain why New York Times business writer Louis Uchitelle found that even when dis­placed workers find new jobs, within two years of being laid off they still earn only about 40 percent of their previous income.61

If service­sector wages and benefits in the United States were more closely aligned with those in manufacturing, as they are in European countries, deindustrialization wouldn't reduce household income as much, and income inequality would not continue growing so quickly.62

The idea that deindustrialization is part of a "natural" economic shift reinforces the argument that the solution to job loss is retraining. The assumption is that plenty of good jobs are available, but that work­ers are not appropriately prepared for them. This belief in the power of education runs deep in American culture, in part because it fits well with the "pull yourself up by your bootstraps" view of the American Dream. A belief in education also reflects a modernist, progressive view of history that assumes that something new and better is always com­ing.

In recent years there has been much talk about the growing "knowledge economy," and displaced workers are increasingly encour­aged to seek training in high­tech areas. This encouragement has been widely supported by state and federal aid to both individuals and ed­ucational institutions.63 To be effective, however, training programs must be geared to emerging labor needs in the local area. Otherwise, the implicit promises of education prove empty.

In the Youngstown area in the years after the steel mills closed, hundreds of local workers enrolled in training programs in refrigera­tion or computer repair. Yet there were almost no jobs in refrigeration, and computer repair jobs disappeared as simple modular replacement, which required little or no special training, became the industry stan­dard. The training proved largely useless.

More recently, after a major textile plant closing in Kannapolis, N.C., the local community college was not given permission to develop training programs for small business skills, even though the local area needed more people with these skills to work in small businesses like real estate and cosmetology.64

Ironically, both cases reflect a conflict between training needs and government programs that were intended to help displaced workers. When education programs provide irrelevant training, workers' frus­tration increases. Some will internalize the experience, blaming them­selves for failing, while others will feel more resentful and angry toward local institutions and government regulations. The result is the grow­ing politics of resentment and the loss of faith in basic institutions and the American Dream.65

Even when retraining programs work, new jobs are often not as good as the jobs from which workers were displaced. In manufactur­ing, especially, while the work was sometimes dangerous, physically dif­ficult and tedious, unionization ensured good wages and benefits. Working in a major local industry or for the largest local employer of­fered a sense of belonging as well as security. Despite irregular work patterns due to slowdowns, workers in the steel and auto industries had job security and seniority that balanced occasional economic strain with long­term certainty, until plants closed permanently. In many cases, new jobs offer less of everything, from wages to security.

In many communities, tourism and entertainment have been touted to revitalize deindustrialized communities. While bringing in visitors' dollars does help the local economy as a whole, for displaced workers, the jobs associated with the entertainment industry represent a sharp and dramatic decline. When a new Wendy's fast food store opened in downtown Gary in 1985, local officials saw it as a sign of eco­nomic growth, but S. Paul O'Hara points out that "several of the new employees of the restaurant were former steelworkers who had traded their mill wages for $3.35 an hour." As one local worker explained, they had little choice: " 'Sure we would rather have the $15­to­$20­an­hour jobs that the steel mills used to provide, but that is not reality.' "66

At the same time, the shift from industrial to retail and service jobs may hit workers of color especially hard. As Robert O. Self argues in writing about deindustrialization in Oakland, "The service sector was extraordinarily slow in absorbing African­American and Latino work­ers, except in low­paying 'back of the house' occupations."67

The shift to lower wages, fewer benefits and less unionization has occurred not only in the service sector but also in manufacturing, where restructuring, technology, and specialization have created a niche for smaller companies. Even within unionized industries such as the auto industry, restructuring has created lower­wage tiers for many workers, especially newer employees. Some might argue that lower wages simply reflect a correction of the "inflated" wages and benefits unionized workers once earned in the steel and auto industries - labor costs that some claim were the cause of America's industrial decline.

Starting in the 1950s, American industrial workers began to earn high enough wages to gain middle­class lifestyles, and they bargained for benefit packages that included good health insurance and pensions. The pay and benefits negotiated by unions rippled through the na­tional economy, raising the standard of living for all workers in what economists call wage pull. But deindustrialization and associated deu­nionization have had the reverse effect. As unionized industries close, wages and benefits have fallen across the board, for all workers. At the same time, benefits are declining, as workers are being asked to pay for all or part of their health insurance. To put this differently, one of the social costs of deindustrialization is the declining economic security of the entire American middle and working class. Even workers who were never displaced by plant closings or industry declines have been affected.

Job security has also declined, again not only for the individual workers displaced by deindustrialization but across the board. Espe­cially in the service sector, jobs are more likely to be temporary, part­time and contingent. Workers without unions have little or no protection against lay­offs.

For companies, these policies reflect a move toward greater flexi­bility, even as they allow employers to offer lower wages and fewer ben­efits to more workers. Those who work less than 40 hours per week and those who remain on a specific job for less than six months can more easily be denied raises and benefits.

The lack of job security no doubt helps the corporate bottom line, but for workers - and perhaps especially for workers who once en­joyed the benefits and protections of unionized jobs - the financial in­security of the new employment patterns can be devastating. For many, replacing a single good industrial job requires working two or three service industry jobs, adding to household stress and increasing vul­nerability to sickness and injury.

These patterns can be traced not only to changes in business man­agement practices but also to the overall decline in unionization. While government and business policy play an important role in this trend, workers' own experiences of deindustrialization also play a part.

Displaced workers often lose faith in institutions of all kinds, in­cluding unions. If the union couldn't protect them from losing a fac­tory job, how could it provide protection in a different industry? At the same time, workers have been encouraged to fear that unionization ac­tivism will drive employers away.

Tami Friedman notes that this pattern appeared in Yonkers, N.Y., as early as the 1950s. After local companies began to downsize, the local newspaper "warned unionists to consider the enormous need for cau­tion against upsetting our bread­winning applecart." When one com­pany sought wage concessions, even during a period of record sales and profits, "frightened union members quickly accepted the firm's proposals by a nearly three­to­one margin."68

More recently, a PBS Nightly Business Report story during the 1998 General Motors strike in Flint, Mich., used images of abandoned buildings and steel mills in Youngstown to illustrate a warning that the demands of workers could drive the company to move jobs to Mexico, something that had already happened in the Youngstown area. The story closed with reporter Stephen Aug's comment that autoworkers "may have jobs now, but what about next year, and the year after?"69

In an environment where workers are afraid of losing jobs - and in communities that have experienced wide­scale job loss such fears are endemic. Warnings like these are likely to be taken to heart. The problem is that without unionization, workers earn less, receive fewer benefits, endure poorer working conditions and have less job security.70

Deindustrialization and deunionization have additional effects. When displaced workers in Youngstown entered the construction in­dustry in 1980s and 1990s, employment opportunities in construction became more episodic. This led many younger workers to reject the idea of entering apprenticeship programs in the building trades. Em­ployers began to worry about the "graying" of the workforce.

In other industries, lower wages and benefits have led to higher turnover rates, which means that companies have fewer skilled em­ployees. The "churning" of the workforce may undermine the quality of American manufacturing. In 2008, Ohio Policy Matters researchers found that despite the weak labor market in Ohio, employers were hav­ing difficulty hiring skilled workers. The report cites evidence of de­clines in apprenticeship programs and occupational shortages in both manufacturing and health care. They argued that recent employer concerns about occupational shortages and skill deficits should be taken seriously. Furthermore, government and business leaders must work together and engage in a "comprehensive long­term human resource strategies that provide meaningful career opportunities for workers."71

While deindustrialization may not be caused by a "natural" eco­nomic shift, it has clearly contributed to wide­ranging changes in the nature of work in America. Those changes are making economic sta­bility and upward mobility increasingly elusive for many workers.

New employment patterns developed in what some call the "post­industrial era" are affecting workers in many industries, from manu­facturing to health care, education to the media, finance to government. Job security, good benefits and long­term relationships between employers and workers are becoming relics of a fading past. The result is economic vulnerability, constant change and uncertainty that are reshaping the experience of work as well as the management of companies.

While current management theory extols the virtues of flexibility, in the long run it remains to be seen whether this shift will contribute to or continue to undermine the American economy.

Deindustrialized Communities Face Long­Term Economic and Social Challenges

Any community in which a significant portion of the population loses good jobs at the same time will face a crisis. For communities that have relied primarily on one or two key industries, the social costs of deindustrialization can be especially damaging. In both structural and social ways, communities lose the essential resources that allow them to function well. As Robert Bellah argued in his 1985 study of American community life, Habits of the Heart, communities thrive when they have a shared sense of history and identity, a "community of memory" that facilitates common visions of the community's strengths and weak­nesses and collective faith in the community's ability to take effective action on its own behalf.72

A "community of memory" is not idealized or nostalgic; rather, it embraces the triumphs and difficulties of a community's past, identi­fying in a shared story of "who we are" the basis for moving ahead. In­dustrialization provided many cities with clear identities, tying Pittsburgh to steelmaking, Detroit to automaking, Lowell to textiles and so on. When this shared identity is lost, communities struggle. The loss of population, decline of the local landscape, loss of faith in both the community and its institutions, and internalization of an image of the community as a site of failure undermine the social resources that might otherwise allow communities to recover and redefine them­selves. When this happens, communities can become desperate, and the economics of desperation can further undermine a city's well­being.

Deindustrialization often leads to population declines, both imme­diately after major job losses and in subsequent years, as some dis­placed workers move in search of work. While such moves may or may not provide workers and their families with more secure futures, their departures undermine the effectiveness of the communities they leave behind. As Robert Putnam and Lewis Feldstein have argued, social cap­ital is an important resource for responding to community challenges, and social capital is created through human networks. By working to­gether, playing in softball or bowling leagues and serving on church or neighborhood committees, people who live near each other create community. They come to know each other, build trust and develop a sense of investment in the place where they live, its culture and its peo­ple.73 Especially in cities where many people work for the same com­pany or industry, shared work contributes to this sense of belonging, so social networks in places like Youngstown, Flint, the Silicon Valley, or various mining towns become especially strong. When people leave these areas, the loss involves more than simply numbers.

Social capital involves not only people's relationships with each other but also their relationships with place. Lost jobs in a major in­dustry ripple through the community, affecting other businesses, lead­ing to home foreclosures and increases in crime and reducing the tax base that allows cities to respond to problems like abandoned houses and rising crime rates. As a result, an almost iconic marker of deindus­trialization is urban decay: boarded­up businesses, abandoned build­ings, once­vibrant neighborhoods that become eerily quiet and seemingly dangerous. At the same time, when industries shut down, they often leave physical markers on the landscape - crumbling fac­tory buildings or brownfields where factories once stood. This land­scape of loss also undermines social capital, in two ways.

First, as Dolores Hayden has argued, landscape is an important "storehouse" for memory, providing visual cues that represent major events and aspects of individual and community life.74 When buildings are torn down or allowed to decay, communities lose a resource for the shared memory that is the basis for effective action. At the same time, the altered landscape creates a new sense of place. To put it simply, liv­ing in a deteriorating environment reinforces feelings of hopelessness that often accompany job loss. Further, this response affects not only displaced workers but the community as a whole. Anyone who visited the downtown area of a place like East St. Louis, Braddock, Penn., or Compton, Calif., during the years after their local industries shut down, understands this effect.

Over time, a struggling community may become divided, as those who promote a new vision of the city blame displaced workers for the area's problems. For example, civic leaders and developers in Ana­conda, Mont., blamed former smelter workers for having the "wrong mentality." As one planner explained, the community's main problems were "not the economic loss or ecological impact that had torn the so­cial fiber of the city, but a particular mentality embraced by the community."75 Another stated that she hoped the redevelopment would, " 'inject' the community with new kinds of residents," an attitude that, as Kent Curtis suggests, reflects the "marginalization of members of the traditional working­class community, who, like the ruins of the hill­side, were mere props to be trotted out when circumstances seemed to demand, but who were otherwise useless to the future of the town."76

The division between workers and developers in Anaconda shows that even when communities begin to revitalize, economic growth can happen at the expense of local cohesion and community memory. As Curtis explains, displaced workers saw the development of a new golf course "as only the latest stage in a long process of change that has been alienating them from their place in the community since the early 1970s."77

Dissolving social networks and decaying landscapes work together with unemployment and declining local tax bases to undermine deindustrialized communities' confidence. While those who study deindus­trialization understand that corporations shut down plants for a variety of reasons that usually have little to do with local culture, affected com­munities often move from initial anger at the departing company to self­doubt. Some area residents, and too often local leaders, begin to wonder whether a plant closing could be attributed to some quality of the community and its people, and this can in turn persuade area res­idents that the city's failure to bounce back is its own fault. In some cases, this attitude is couched in specific terms.

In Yonkers, N.Y., for example, Friedman reports that local leaders began to worry about the city having a "bad labor name" as early as 1954. They suggested that the area couldn't attract new business due to its reputation for a strong local labor movement.78

In Youngstown, some local residents have come to assume that their community is almost naturally incompetent. When the public ad­dress system at Youngstown State University's football stadium ran into problems during a game a few years ago, one exasperated fan was heard to comment, "Well, what do you expect? This is Youngstown." Such attitudes both reflect and contribute to the community's loss of confidence in its ability to take effective action.

For many residents of such communities, loss of confidence in the community is part of a larger pattern of lost confidence in institutions. Area workers paid their taxes, tithed at church, devoted their work lives and sometimes their health to corporations, maintained union memberships and faithfully voted for whatever political party domi­nated in the local area for years, expecting that they could count on these institutions to reward their loyalty and to have the power to pro­tect them from serious problems. For many, these institutions repre­sented reciprocal and core community relationships.

In exchange for workers' support, cities were supposed to main­tain streets, churches would provide spiritual comfort, employers would provide and unions would protect jobs, and politicians would protect the community, and all failed. When the organizations that peo­ple count on all prove unable to bring back old industries or attract new jobs, people become skeptical and resentful. In some cases, people become insular and wary of outsiders, trusting only their closest social networks. If people come to see institutions as inherently ineffective, they may view most efforts at development or addressing crime and urban decay as doomed from the outset. Lacking strong leadership or faith in the effectiveness of local institutions, some communities have become paralyzed and unable to launch effective responses to dein­dustrialization.79

Deindustrialized and economically struggling communities risk losing control of their identities as citizens lose faith in the community. Outsiders, especially the media, are left to define the area's story. Too often, deindustrialized communities are assigned negative images as places of failure and loss. Places like Gary and Youngstown know this difficulty all too well. O'Hara suggests that loss of its former identity made Gary vulnerable to being defined in entirely negative terms:

        "Without the sense of itself as a producing steel town, Gary lost the ability not only to create or control its

        own urban image but also to defend itself against its harshest critics. Instead, Gary became a national

        ex­ample of deindustrialized rustbelt decay. This dramatic change in the composition and viability of local

        image is one of the strongest and longest­lasting effects of deindustrialization."80

During the two decades after the mills closed, Youngstown was de­fined first as a site of struggle. Immediately after the shutdowns, local religious and labor leaders organized an effort to buy and operate the mills locally. As the city fell into decay and lost more jobs, Youngstown became one of several places (together with Gary and Flint) that took on iconic status as "symbol[s] of the failure of American industry."81

When the city did not recover within a decade, as the crime rate rose in the early 1990s and when a series of incidents made local pat­terns of political corruption visible nationally, Youngstown became known for corruption. During the same period, as the city grabbed at every possible opportunity for economic development - often coming up empty handed - the area gained a reputation for desperation. These versions of Youngstown's story told by the national media res­onated in the community because local residents were themselves frus­trated about the continuing problems.

When deindustrialized communities are defined in persistently negative ways, that image becomes an additional barrier to recovery. The city must fight even harder to attract new businesses, engage com­munity members in development efforts and promote their cause in the public arena.

Combine this image problem with the competition for jobs, and we see former industrial areas going to great lengths - and often un­dermining their own stability - in order to attract new economic op­portunities. In some cases, deindustrialized cities have pinned their hopes on tourism, hoping to attract visitors and their dollars through convention centers (Youngstown's Chevrolet Center), amusement parks (Flint's Auto World), casinos (Gary, Ind.), golf courses (Anaconda, Mont.), shopping malls (Homestead, Penn.), or historic sites built around and sometimes literally on abandoned industrial sites (Bethle­hem, Penn.). Such efforts provide construction jobs initially, and the more successful efforts bring in new tax dollars, but they rarely bring high­quality jobs. City tax coffers may gain, but area workers continue to struggle.

Elsewhere, deindustrialized communities have welcomed public and private prisons. Northumberland County, Penn., a former mining community, built two prisons in the 1990s, creating jobs for about 550 people, and in 2001 they considered building another. As the chairman of the County's Board of Commissioners explained, "Anything that can bring recession­proof jobs, we want it here."82

Similarly, Youngstown saw prisons as a growth industry in the 1990s, supporting the development of four new prisons within a five­year period, including a state super max facility and a private prison operated by the Corrections Corporation of America (CCA). While some area workers found jobs building these facilities and later as guards, neither the pay nor the working conditions made them high­quality jobs.

When six prisoners escaped from the CCA prison, investigations suggested that they were assisted by guards whose low pay had made them susceptible to bribes. Worse, the city's reputation for crime and economic desperation was exacerbated when it became known as a prison economy, which made it more difficult for the area to attract other kinds of businesses.83

Among the tools that struggling communities use to attract new businesses are tax abatements. By deferring or waiving taxes, cities lower the cost of establishing a company in the hope of attracting new jobs. But the idea that such deals generate new jobs is often simply a myth.

Greg LeRoy has found that companies often take advantage of deindustrialized communities, rely on taxpayers' confusion about the relationship between subsidies and job creation, and are rarely held accountable for the promised investments and jobs.84

Even when tax abatement succeeds in attracting new employers, it may also bring its own problems. First, because new industrial sites often require less extensive or complex physical structures, companies easily leave communities behind once the tax abatements end. This process is facilitated by the ongoing competition among communities for jobs. As Robert Self argues, "...the frantic competition for private capital investment" creates a "savage rivalry" among cities as they fight to attract jobs and investors.85

This benefits the corporations but puts cities at risk as they gamble on whether the businesses they attract by waiving taxes will stay long enough to make a real contribution to the local economy. When these opportunities fail to transform the local economy, people's expectations of failure are further reinforced.

In the long term, communities face significant challenges in re­defining their identities and rebuilding their economies. In a 2007 re­port, MIT researchers identified some 150 cities, mostly in Northeastern, mid­Atlantic and Midwestern states, that continue to struggle long after major plant closings. Three chronic problems affect communities like Camden, Allentown and Hartford, according to the report: "a lack of civic engagement and institutions, inadequate gov­erning capacity and a chronically negative collective mindset." They have "been left behind by the global economy, the media, major foun­dations and policy trends." These "forgotten cities," as MIT calls them, have difficulty creating effective coalitions and revitalization schemes.86

Yet while these cities may have been forgotten by some, they still matter to the people who live there. Some can't leave and others choose to stay and continue to struggle economically. Some of these "forgot­ten" areas are experiencing a boomerang effect, as a combination of loyalty to place, family ties and affordable housing lure former resi­dents back home. Urban development specialist Hunter Morrison notes that such communities often have a "loyal diaspora" for whom their home towns, regardless of economic struggles, remain at the core of their individual identities. That loyalty, authenticity and a sense of a real place may serve as countervailing resources to help deindustrial­ized communities recover, even after long periods of economic diffi­culty.87

At the same time, deindustrialized communities continue to wres­tle with some core structural problems, especially declining popula­tions, economic development, crime and poverty. Some have come to accept economic decline and the hollowing out of neighborhoods and are trying to redefine themselves as smaller cities. As part of a planning process begun in the early 2000s, Youngstown decided that the only way to move forward was by embracing a new identity as a shrinking city. A community planning effort, forcefully directed by a local city planning agency, created the "2010 plan" for rezoning some areas for light industry, turning some largely abandoned residential areas into green spaces, and discontinuing city services in some neighborhoods.88 In its annual "ideas" issue in 2006, the New York Times Magazine named Youngstown's "Creative Shrinkage" plan one of the nation's best ideas.89

On the one hand, the 2010 plan acknowledges and attempts to deal proactively with one of the most immutable realities of deindus­trialization: declining population. On the other hand, it's unclear whether shrinking the city will in fact contribute to economic develop­ment. Turning decaying neighborhoods into green space may prove to be just another phase of the "undevelopment" story, or worse, an­other injury to an already wounded community.

While MIT's "Forgotten Cities" report highlights communities that continue to struggle, other areas have been held up as shining ex­amples of recovery, including places like Cleveland, Providence and Pittsburgh. In these and other former industrial towns, one can see new office buildings, riverfront parks, gentrified neighborhoods and increased pedestrian traffic downtown. No doubt, such cities should be applauded for reinvigorating their urban cores.

Yet localized development, such as downtown projects, can pro­vide the appearance of recovery while masking deeper continuing problems. Despite new areas of development, unemployment, crime and poverty rates remain high long after plant closings occur. In the past decade, Cleveland has revitalized its lakefront area with new mu­seums, attracted visitors downtown with an annual film festival and re­vitalized old working­class neighborhoods with ethnic restaurants and loft housing, but it still has among the highest poverty and crime rates of any city its size in the United States.90 Similar stories could be told about other supposedly recovered cities, because the wounds of large­scale job loss and major economic shifts simply do not heal quickly.

Nor is the poverty caused by deindustrialization confined to urban areas. Suburbs are also suffering. While the suburban areas around Cleveland, Cincinnati, and Columbus, Ohio, do not look like deindus­trialized cities, they are among the 16 U.S. metropolitan areas with the highest poverty rates in 2008.91

The development we see today in Cleveland may well be the first signs of a more widespread recovery that will eventually reduce the area's poverty rates and in turn lower crime. But such a recovery can­not be built on tourism and entertainment alone. Cities and regions that have been devastated by the major economic shifts of the past three decades need secure, high­paying jobs that are not in constant danger of disappearing.

Conclusion

Hundreds of cities in America now know what Youngstown learned in the 1980s. Youngstown learned about the social costs of deindustrialization, but the community also, sadly, came to understand just how difficult it is to recover from the loss of major industry and the injuries done to thousands of workers, their families and the com­munity itself.

Deindustrialization is not a new story. Nor does it, as some have suggested, follow the traditional historical narratives about natural eco­nomic evolution. Those who have lived in deindustrialized communi­ties have long argued that the social costs and significance of deindustrialization are larger and more lasting than the dominant eco­nomic discourse about "creative destruction" and the fading of the old industrial economy. Deindustrialization is the direct result of corporate and governmental decisions that have not only displaced millions of American workers, but also done major harm to American communi­ties. These injuries to our cities create social and economic costs that everyone pays.92

Unfortunately, many economists still don't get it. In Outsourcing America: The True Cost of Shipping Jobs Overseas and What Can be Done About It, Ron and Anil Hira have described the current public debate over the outsourcing component of deindustrialization as "misleading." In fact, they have been "amazed at the lengths they [proponents of out­sourcing] are willing to go to throw away any semblance of objectivity in their analysis."93

Unfortunately, public policy toward globalization, outsourcing, technological change and unemployment has largely remained wed­ded to increasingly discredited neo­liberal economic concepts. The re­sult is what New York Times reporter Steve Greenhouse describes as a "...glaring disconnect between the way government and business lead­ers talk about globalization and the way average Americans view it."94

The point here is not to say "we told you so." It is, rather, to sug­gest two things. First, because the social costs of deindustrialization af­fect every American, policymakers should take more seriously the long­term and widespread consequences of major industrial declines, regardless of industry. Second, addressing the social costs of deindus­trialization and preventing further industrial losses in the U.S. will re­quire a dramatic rethinking of the nature of the economy and the corporation as well as the role of government in creating a business en­vironment that promotes investment and generates good jobs.

As William Galston argues in The American Prospect, "we should use public policy to spread the gains of economic growth, create equal op­portunity for all and insure workers against wage and income losses against which they cannot protect themselves."95

We should advocate a new vision of capitalism that takes social and human capital every bit as seriously as it does materials and money. And we should advocate policies that encourage forms of economic de­velopment that build strong communities as well as strong companies.

[Mar 20, 2011] The Stigmatization of the Unemployed

March 20, 2011 | naked capitalism

Spencer Thomas:

Very good post. Thank you.

Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism, with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it, the ideas of “dog eat dog”, “every man for himself”, “society should be structured like the animal kingdom, where the weak and sick simply die because they cannot compete, and this is healthy”, and “everything that happens to you is your own fault. There is no such thing as circumstance that cannot be overcome, and certainly no birth lottery.”

The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better) politicians or Fed chairmen, ones who weren’t steeped in this culture and ideology, we’d still be left with the culture in the population at large, and things like the “unemployed stigma” are likely to die very, very hard. Acceptance of the “just-world phenomenon” here in the US runs deep.

[Jan 01, 2011] Does recovery mean new jobs at lower pay

This is something I've been worried about:

Career Shift Often Means Drop in Living Standards, by Catherine Rampell, NYTimes: ...A new study of American workers displaced by the recession sheds light on the sacrifices a large number have made to find work. Many, it turns out, had to switch careers and significantly reduce their living standards. ...

The study, conducted ... at Rutgers, was based on a survey of Americans around the country who were unemployed as of August 2009... As of November 2010, only about one-third had found replacement jobs, either as full-time workers (26 percent) or as part-time workers not wanting a full-time job (8 percent).

And of those who successfully found work, 41 percent had switched into a new career or field. ... Nearly 7 in 10 of the survey’s respondents who took jobs in new fields say they had to take a cut in pay, compared with just 45 percent of workers who successfully found work in their original field.

Of all the newly re-employed..., 29 percent took a reduction in fringe benefits in their new job. Again, those switching careers had to sacrifice more...

[Jan 01, 2011] US Follows Japan: The Rise of Freeters, aka Temps

December 20, 2010

One of the post-bubble era trends in Japan that has caused consternation within the island nation is the rise of an employed underclass. The old economic model was lifetime employment, even though that was a reality observed more at large companies than in the economy overall. Nevertheless, college graduates could expect to find a job without much difficulty and look forward to a stable career if they performed reasonably well.

In the new economic paradigm, wages are compressed among full-time salaried workers (meaning seniority/managerial based pay differentials, which were not all that great in Japan to begin with, have narrowed). And even worse from a societal standpoint is the rise of “freeters” or workers hired into temporary jobs. Some of them can work for the same company for a very long time, but they are not only paid less, but are also not in the hierarchy of permanent worker. Many become freeters right out of college, and are never able to get back on track with their peers, since companies in Japan, as in the US, prefer to hire new college or professional school graduates into their entry level positions.

The bigger implications for Japan are negative. Many freeters can’t afford to live by themselves...

 



Etc

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The Last but not Least


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