Policy Brief #37

The Hardship Experiences of the Long-Term Unemployed in the Detroit Metropolitan Area After the Great Recession (1)
August 2013

Sarah A. Burgard, Lucie Kalousova, Sheldon Danziger, Kristin S. Seefeldt (2), National Poverty Center, Gerald R. Ford School of Public Policy, University of Michigan

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Introduction

The “Great Recession” that lasted from December 2007 through June 2009 was the most severe recession in recent decades. It lasted longer and resulted in more job losses than previous downturns, and an unusually large number of workers experienced long-term unemployment during this recession and the current slow recovery. Analyzing data from the 2008 Survey of Income and Program Participation (SIPP), which tracked households from mid-2008 through early 2011, Johnson and Feng (2013) found that most of the substantial increase in the unemployment rate was driven by a surge in multiple and extended jobless spells (lasting 6 months or more), rather than an increase in the likelihood of becoming unemployed at all. The Bureau of Labor Statistics reports that 41 percent of the unemployed in 2012 had been without work for 27 weeks or more compared to only 17.6 percent prior to the recession (3).

Long-term unemployment is associated with serious hardships. For example, levels of food insecurity increase as the unemployment rate rises (Nord and Carlson 2009) as do levels of financial problems (Lovell and Oh 2006). While we know about these broad associations between unemployment rates and rates of hardship across the population, prior studies typically have focused on one or just a few hardships. In this brief, we examine levels and correlates of long- term unemployment among working age adults in the Michigan and Recession and Recovery Study (MRRS). We also explore whether long-term unemployment was associated with higher levels of material hardship in four key domains: financial problems, housing instability, food insecurity, and foregone medical care. We examine these domains one at a time, and then consider the total burden of hardship across the four domains.

Michigan Recession and Recovery Study (MRRS)

The MRRS is following a stratified random sample of English-speaking adults who lived in Southeastern Michigan (Macomb, Oakland, and Wayne counties) and were ages 19 to 64 at the first interview in late 2009/early 2010. The MRRS oversampled African Americans and includes mainly African American and non-Hispanic white respondents, reflecting the residential composition of the area (4). To date, respondents have been interviewed in-person twice; the second interview took place in spring/summer 2011. A third wave of interviews is taking place in summer/fall 2013 (5).

In this brief, we focus on the 757 MRRS respondents who participated in the first two waves and were aged 25 to 64, those likely to be done with their schooling and still in the prime working years. We explore how they were faring at the wave 2 interview in 2011, drawing on their experiences since the wave 1 interview in 2009/early 2010 and for several years before the wave 1 interview. Respondents reported their employment status (employed part time or full time, unemployed, or out of the labor force) for each month between January 2007 and the wave 1 interview month, and again for all the months between their wave 1 and wave 2 interviews. To ensure comparability, we considered only the months from January 2007 through March 2011, a period of 51 monthly reports available for all respondents.

Unemployment spells were identified as transitions from a report of being employed in one month to a report in the subsequent month of being unemployed; long-term unemployment is defined as a spell of six consecutive months or more. We also used information about total months in the labor force (that is, reports of being either employed or unemployed and looking for work), versus not in the labor force (that is, reports of keeping house, being in school, retired or disabled or not looking for work). We distinguish among four groups:

Stably Employed

No months of unemployment in the 51 month calendar and in the labor force at least 50% of these months

Some Unemployment

Any months of unemployment, but no spells of 6+ continuous months of unemployment, and in the labor force at least 50% of the months in the calendar

Long-term Unemployed

6+ months continuously unemployed at any point between January 2007 and March 2011 and in the labor force at least 50% of these months

Low Labor Force Attachment

In the labor force less than 50% of the months in the 51 month calendar

Characteristics of the Long-Term Unemployed and Other Employment Groups

We examined a range of social and demographic characteristics including race, age, sex, marital status, and educational attainment that are known to be associated with variations in employment status. These measures and all others are defined and described in the Appendix.

Table 1 shows the percentage of respondents ages 25 to 64 who we classified in each employment group, for the whole sample and for selected sub-groups. We classify 12.0 percent of respondents as long-term unemployed; an additional 21.1 percent experienced some, but not long-term unemployment (6). The stably employed were only 51.8 percent of all respondents; the final 15 percent of this sample had low attachment to the labor force over the January 2007 through March 2011 period.

Table 1: Weighted Characteristics of Michigan Recession and Recovery Study respondents in 2010 by Age Cohort at Baseline, N = 847

The distribution of employment status varies dramatically by race, education, age and marital status. Blacks were much less likely than non-Blacks to have been steadily employed without a single month of unemployment (32.9 versus 57.1 percent) and respondents with less than a bachelor’s degree were much less likely than college graduates to have been steadily employed (44.5 versus 67.1 percent). Blacks (19.3 percent) and less educated respondents (15.0 percent) were also more likely to have experienced long-term unemployment than their counterparts and were more likely to have been out of the labor force.

Although the gender differences are marginally statistically significant, the differences across categories are not large. There were significant and large differences in employment status by age. Young adults (ages 25 to 34) and mature adults (ages 55 to 64) were much less likely to be stably employed than prime-aged adults (ages 35 to 54). Young adults were much more likely to have experienced some unemployment than prime-age adults (33.4 versus 19.8 percent) and also were more likely to have been long- term unemployed (19.9 versus 9.0 percent). Mature adults were also less likely to be stably employed than prime-aged adults (45.7 versus 63.0 percent), but they were similarly likely to have experienced any unemployment or long- term unemployment (10.6 versus 9.0 percent). Mature adults were much more likely to have had low attachment to the labor force (28.1 versus 8.2 percent). Finally, respondents who were not married at wave 2 were more likely than their married counterparts to have had some unemployment (29.3 versus 16.7 percent) and to have been long-term unemployed (19.8 versus 7.8 percent).

It is important to note that our classification probably represents an undercount of adults with serious employment problems (Schmitt and Jones 2012). For one thing, “discouraged workers,” or those who have stopped searching for work because of a perceived lack of available jobs, are classified as “not in the labor force” if they were not looking for work in at least 50% of the months. Because unemployment was very high in Michigan for many years prior to the start of the Great Recession, a substantial number of individuals could have stopped looking prior to the January 2007 start of our calendar window of observation.

Material Hardship Among the Long-Term Unemployed

Unemployment, especially long-term unemployment, can contribute to financial problems. Many respondents experienced one or more these four types of financial problems:

  • Recently behind on utility bills
  • Recently used payday loans
  • Recently had a credit card cancelled
  • Recently went through bankruptcy

Foreclosures received much attention during the Great Recession, but both homeowners and renters experienced housing problems. We define housing instability based on a range of severe problems including some that have not yet led to housing loss, but indicate stressful conditions. These include:

  • Recently behind on rent
  • Recently behind on mortgage payments or in the foreclosure process
  • Moved for cost reasons recently
  • Moved in with others to share expenses recently
  • Evicted recently
  • Experienced homelessness recently

A third material hardship is “food insecurity,” a concept that reflects concerns about running out of food, changing one’s diet for financial reasons, and actual disruptions in eating habits caused by lack of resources (7). MRRS adapted the USDA’s short form food security module, which consists of six items that ask about an individual’s ability to purchase and consume adequate and acceptable food.

Fourth, not attending to medical problems can lead to worse health outcomes and to increased medical costs for individuals who put off needed care. We asked respondents whether they had needed to see a doctor or dentist in the year prior to each interview but could not afford to go, a concept typically called “foregone care.”

Table 2 presents the percent of all respondents reporting each of these four material hardships in two ways: (A) ever experienced hardship, that is, at either wave 1 or wave 2 or at both waves, and (B) at both waves. About 47% of all respondents reported financial problems in at least one wave, and 20.2 percent reported financial problems at both waves. Financial problems were much more common for the long-term unemployed—67.1 percent reported them in at least one wave and 35.2 percent at both waves. Those with some (but not long-term) unemployment also were more likely to experience a financial problem in at least one wave. Respondents with no unemployment, not surprisingly, had fewer than average financial problems, but the experiences of these fairly serious issues were still substantial—39.6% in at least one wave and 16.7% at both waves.

Figure 1: MRRS Unemployment Rate by Age Cohorts Between January 2007 and March 2011 (5)

Long-term unemployment was also associated with higher than average levels of housing instability (49.7 versus 29.4 percent for the overall sample), food insecurity (55.2 versus 27.5 percent) and foregone medical care (56.5 versus 26.4 percent) in at least one wave. Levels of these other material hardships were also higher than average among those with some (but not long-term) unemployment. However, those with shorter spells had fewer hardships than the long-term unemployed (except in the case of housing instability). Those not in the labor force appear similar to the stably employed in some domains (financial problems and housing instability), but were worse off in others (food insecurity and foregone care).

Who Avoided Problems and Who Had Multiple Problems?

We now sum hardships across the four domains, assigning one point for each if the respondent reported having the experience at the second wave. These cumulative scores reveal how many respondents escaped all hardships in the wake of the Great Recession (a score of zero), as well as the total burdens among those who did.

Table 3 shows the percent of respondents at each level of this summary score, for the whole sample and by employment status. Again, there is significant variation. Hardships were widespread—only 54.6 percent of all respondents reported no problems at either wave. Even among those with no unemployment, about 35 percent experienced at least one problem. The long-term unemployed fared worst—only 25.5 percent experienced no problems whereas 19.6 percent experienced problems in all four domains. Those with short spells of unemployment fared significantly worse than those with no unemployment, but much better than the long-term unemployed—only 8.8 percent reported all four hardships, and 44.7 percent reported none. Respondents who were not strongly attached to the labor force were only slightly worse off than those without any unemployment (8).

Table 2: Employment Status, Unemployment and Employment Problems Patterns Overall and by Age Cohort, N = 847

Conclusion

We found very high levels of long-term unemployment for metro Detroit adults during and after the Great Recession, in addition to high levels of short-term unemployment. Only about half of all working age respondents worked in every month between January 2007 and March 2011; about one-third experienced at least one month of unemployment. Groups that have higher unemployment rates at all stages of the business cycle, particularly those without a college degree and Black residents, were at greater risk of reporting long-term unemployment.

These findings hint at the gravity of the levels and consequences of long-term unemployment, but they cannot show that the Great Recession was the only cause of these material hardships. Some respondents may have also experienced material hardship in one or more domains prior to the Great Recession as unemployment rates in the region have been high since early in the 2000s.

Our findings for Southeast Michigan reflect the historically high levels of long-term unemployment experienced during the Great Recession (United States Congress Joint Economic Committee 2011). The patterns we observe are worrisome because they signal the potential for the Great Recession to exacerbate longstanding labor market inequalities by race and education, as long spells of joblessness are likely to contribute to the erosion of skills and wages over time, a hardship we did not measure.

Moreover, our findings highlight the many hardships that are associated with long-term unemployment. Compared to other respondents, the long-term unemployed were more likely to report financial problems, housing instability, food insecurity, and foregone medical care. About one-fifth of the long-term unemployed experienced hardships in all four domains, suggesting that policies to help the long-term unemployed need to focus on more than just finding jobs.

Sources

Johnson, R. W. and A. G. Feng (2013). Financial Consequences of Long-Term Unemployment During the Great Recession and Recovery. Unemployment and Recovery Project Brief #13. Washington D.C., Urban Institute.

Lovell, V. and G.-T. Oh (2006). “Women’s Job Loss and Material Hardship.” Journal of Women, Politics & Policy 27(3-4): 169-183.

Nord, M. and S. Carlson (2009). Household Food Security in the United States. Economic Research Report No. (ERR-83), USDA, Economic Research Service.

Schmitt, J. and J. Jones (2012). Down and Out: Measuring Long-term Hardship in the Labor Market. Washington, D.C., Center for Economic and Policy Research.

United States Congress Joint Economic Committee (2011). Addressing long-term unemployment after the great recession: The crucial role of workforce training [Electronic version]. Washington, D.C.



Footnotes

(1) The first two waves of the Michigan Recession and Recovery Study (MRRS) were supported in part by grants from the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Vice President for Research at the University of Michigan and the Office of the Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services. This analysis was made possible by a grant from the Rockefeller Foundation. For additional information, contact Sarah Burgard (burgards@umich.edu) or Kristin Seefeldt (kseef@umich.edu). Shawn Pelak and Tedi Engler provided valuable assistance in the gathering and processing of the MRRS data.

(2) Sarah Burgard is an Associate Professor of Sociology and Epidemiology, and a Research Associate Professor at the Population Studies Center, all at the University of Michigan. Lucie Kalousova is a doctoral candidate in the joint program in Sociology and Health Policy at the University of Michigan. Sheldon Danziger is H.J. Meyer Distinguished University Professor of Public Policy and Director of the National Poverty Center at the Gerald R. Ford School of Public Policy, University of Michigan. Kristin Seefeldt is an Assistant Professor of Social Work at the University of Michigan.

(3) Data retrieved from U.S. Department of Labor, Bureau Labor Statistics, Labor Force Statistics from the Current Population Survey: http://www.bls.gov/cps/tables.htm#charunem.

(4) Survey weights are used in all analyses reported here to make the results representative of the population in the study area.

(5) A total of 914 respondents were interviewed at wave one, with a survey response rate of 82.8%; 847 of the surviving respondents were re-interviewed in spring/summer 2011, for a wave two response rate of 93.9%. More information about the study and related papers and policy briefs can be found at: http://www.npc.umich.edu/research/recessionsurvey/index.php.

(6) In calculations not shown, we found that 7.5% of the sample had been unemployed for a year or longer.

(7) For more information, see http://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in- the-us/measurement.aspx.

(8) We also conducted analyses using a calendar that was restricted to the period from October 2008 to March 2011. The estimated percentage of our respondents experiencing long-term unemployment was smaller in this shorter window (overall 6.4% versus 12.0%), as workers did not have as long to experience these spells. However, the pattern of social disparities was very similar to those reported here. Levels of material hardship by employment category were also very similar to those reported here. We present the results using the calendar period beginning in January 2007 because problems were already present in the Southeastern Michigan area prior to the official start (December 2007) of the Great Recession.



Appendix: Measures Used in This Brief

Appendix: Measures Used in This Brief


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