Boom Town and Bust City: A Tale of Two New Yorks
Unfortunately for those outside the finance sector and its satellite industries, the benefits of this comeback have largely been elusive. The American Recovery and Reinvestment Act, better known as the stimulus, certainly helped the working and middle class. The stimulus social spending—like the childcare money and the TANF Emergency Contingency Fund, which created a job subsidy program for parents receiving welfare—made palpable differences in people’s lives. The stimulus both created and saved jobs in New York City—some 22,000 in the third quarter of 2010 alone—and unemployment would have risen without it.
Yet the stimulus didn’t do nearly enough: it wasn’t big enough, direct enough or targeted enough to help the people who needed it most. In New York, as in much of the country, those who needed it most have tended to be the young, people of color, and low-income and blue-collar workers. They are women like Luz Villanueva and Belgica Malu, who stood shivering in yet another job fair line in November, hoping to end their yearlong job search. And they are women like Nancy, a 56-year-old domestic worker from Colombia whose age and limited English and education have conspired to keep her jobless for more than two years. Nearly one in four low-income Latinos reports losing a job or having hours or income reduced, according to the Community Service Society’s 2010 “Unheard Third” study, and these women certainly proved the point. Luz and Nancy can barely afford the subway.
They are also men like Chang Ahn, 62, a Korean immigrant with legs made spindly by polio, who lost his job in the classified department of the Korea Times in December 2008—a job he’d held for twenty years—and has been unable to find work since. He tried to find another media job and even asked fellow church members about washing feet at nail salons, to no avail. He blames his disability and age—and he’s probably right; in 2009 men between 55 and 64 held the record for long-term unemployment in New York City, with an average of thirty-nine weeks.
And then there is David Ward, a 24-year-old father of two, who stood outside the city’s intake center for homeless families on a chilly November day, preparing to enter the homeless system for the first time. “I never expected to come here—never wanted to—I always expected to do things on my own, with a job,” he says. But after failing to find work more than two years after losing his job at Rite Aid, he finds himself shoved toward an unexpected bitter reality. In this reality, young men with limited education and even more limited means can spend years trying to find a job, with no luck. In this reality, only one in four black men in New York City between 16 and 24 is employed, as a recent study by the Community Service Society reveals. And in this reality, the jobs that were created by the stimulus, many through infrastructure projects, went largely to people with more skills, education, work experience and access.
A targeted approach to job creation—in the form of affirmative action hiring, direct job creation or wage subsidies for companies that hire particular groups of workers—would have helped moderate this trend. But for the most part that didn’t happen. The stimulus money was simply released, with little direction and even less accountability.
“I think the administration was very reluctant to create targeted programs,” says the Women of Color Policy Network’s Mason. “But you cannot just ignore [these communities] and say, ‘Well, everything will work itself out.’ This is the same problem with the trickle-down economics,” she continues. “If I have a broken leg and you have a small cut on your finger, it doesn’t make sense to put a patch on both those things. They’re different remedies, and they call for different types of responses.”
And there’s another problem. Some of the most effective stimulus programs were either too narrow in scope or too poorly funded to make the difference they could have. The summer youth employment program is one example. An enormously useful way to introduce young people into the workforce, this program provided jobs and training to more than 35,000 young New Yorkers during the summer of 2010. But it was not funded adequately enough to meet the full need, and its three-month time limit undercut its purpose. “The summer program by itself is not enough to change people’s lives,” says Sum. “You’ve got to do year-round job creation.”
More distressing is the case of the TANF Emergency Contingency Fund. This program created some 240,000 jobs nationwide for low-income parents receiving welfare and was considered so effective that even some Republicans were gaga for it. So what happened? Congress let its funding lapse on September 30—leaving people like Pamela Brown, the former Bank of America assistant, stuck cleaning streets for the welfare department. “They’ve never looked at my résumé,” she says.
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Outside the precincts of New York, the story is not much cheerier. As Andrew Sum and Ishwar Khatiwada’s study demonstrates, nationwide, suffering during the recession followed a straight Euclidean line from poorest to richest, with the poorest enduring catastrophic job losses, those in the middle enduring significant though less pervasive job losses and the richest enjoying scarcely a blip. Or put differently, New York is a near perfect allegory for the cruel geometry of this recession.
A glance at more recent unemployment data that Sum and Khatiwada updated for The Nation tells the story. Between January and October 2010, average unemployment rates for workers in the lowest income decile (those with a household income of $12,499 or less) hovered at 29.4 percent, a figure that surpasses the Great Depression’s nationwide unemployment high of 25 percent. For those in the second-lowest income decile ($12,500 to $19,999), unemployment hovered at 20.1 percent. Among those in the third-lowest ($20,000 to $29,999), it was 14.9 percent—and on and on in an increasingly cheerful progression to those in the top two deciles ($100,000 to $149,999 and $150,000 and above), who enjoyed the impressively low unemployment rates of 4.1 and 3.4 percent respectively. “See those last two groups?” asks Sum. “We call that full employment.”
Sum and Khatiwada did similar analyses for underemployment rates and underutilization rates (a figure that combines the unemployed, the underemployed and those who are not looking but still want work). In each instance the data follow the same distressing pyramid pattern. Underemployed workers in the bottom decile were working part time or at reduced hours at almost ten times the rate of those in the top decile, or 19.5 percent compared with 2 percent. Underutilized workers in the bottom decile were “underutilized” at roughly seven times the rate of those in the top income decile (and two and a half to three times the rate for their own group in the 1990s). Which is to say: while 49 percent (or one out of every two) of the poorest Americans were “underutilized” during the first ten months of 2010, only 6.8 percent of those in the top income decile shared this fate. Overall, nearly 30 million workers were “underutilized.”
“This [disparity] is worse than the worst third world country I’ve ever seen in my life,” says Sum. “And nobody wants to openly admit this because they want this little myth that we’re all in this together—the jobless is everybody. No, it is not. It is overwhelmingly among low income and then low-middle income.”
For Sum, the solution to this skew is at once obvious and challenging. At its most basic, it primarily requires good old-fashioned, WPA-style job creation, particularly for young people, the group hit hardest by the recession. “I would take all the stimulus money and put it directly into job creation,” he says. But in an important twist on what the government did the last time around, this stimulus would be “very targeted.” There would be guidelines requiring any company or agency that gets stimulus money to hire real people—not just stash the money away in their budgets, as so many did—and to hire unemployed people more specifically. Moreover, there would be incentives, in the form of wage subsidies and tax credits, to induce companies to hire low-income workers, young and adult. And there would be training and education. Call it a trickle-up recovery.
But how does any of this happen now? In the wake of Republican victories, it’s hard to imagine that we’re in for a change in policy anytime soon. And yet there are faint stirrings of hope: in the coalitions of the unemployed; the 99er unions; the grassroots groups that have come together to fight for job creation, unemployment insurance, TANF funding and more. They have not given up.
Pamela Brown was never an activist during her years in the banking trenches, but unemployment and welfare have made her a self-described dissident. In 2009 she joined Community Voices Heard, a grassroots group of low-income New Yorkers, and became a leader in its fight for jobs and welfare rights. “The only way we’re going to change our lives collectively is to get politically engaged,” she says. “It’s that simple.”