'Total' Unemployment Pegged at 17%
If the housing recovery is supposed to be led by job growth, as most experts have predicted, it's going to be a long, slow climb from the bottom, according to figures released at the Mortgage Bankers Association's National Secondary Market Conference in New York last week. Indeed, although the recession was "clearly over" last summer, the MBA's chief economist, Jay Brinkmann, said the employment picture is anything but potent.
The unemployment rate nationally has been pegged at a little under 10% by Uncle Sam, but Brinkmann said the true rate, or what he called the "total" unemployment rate, is up around the 17% level nationally, and even higher in a dozen states.
The "total" unemployment rate includes not just those actively looking for work but also people who are in and out of the workforce-discouraged people who are no longer looking, those who were forced to take part-time positions while seeking full-time jobs, and others only marginally employed. Not surprisingly, Michigan has the nation's highest total unemployment rate at 22.9%. But in something of a surprise, California, the nation's largest housing market, is next at 22.9%.
Nevada has a 21.6% total out-of-work rate, Florida is at 20.4% and North Carolina is at 18.2%. All are considered key housing markets.
Real unemployment is "holding back the real estate market's recovery," Brinkmann said in presenting his outlook for 2010 and beyond.
The MBA economist also noted that the number of unemployed workers who haven't had a paycheck for more than six months-"Almost a permanent kind of unemployed"-is rapidly approaching 50%. And in that regard, he added, "We are approaching absolutely uncharted territory."
Those who have been out of work for that long find it "more difficult" to re-enter the workforce than those who haven't had a job for shorter periods.
According to Joe Peek, a professor in the Gatton School of Business at the University of Kentucky, chronic unemployment and underemployment will have lasting damage on the nation's workforce, especially for young people just entering the job market.
"Labor market research has found a cohort effect on the lifetime of incomes of people who first enter the labor force during recessions, finding that they are less likely to find a job, and when they do find one, it is at a lower wage, and that lower level of income tends to persist through their careers," Peek said in a study for the Research Institute for Housing America, the MBA's think tank.
"Without a reasonably rapid recovery in employment, at this point an unlikely scenario, we risk creating a 'lost generation' that may never catch up."