The current recession has hit our city and our borough especially hard. In a manner reminiscent of the previous recession, the greatest pain has thus far been experienced by well-educated New Yorkers.
Previous Recession Saw Long-Term Unemployment Rise Amongst the Educated
In the recession that gripped the United States in the early part of this decade (March 2001 to November 2001), the unemployment rate rose across all categories of workers. The long-term unemployed (those unemployed for more that six months) grew in size dramatically during the period surrounding the 2001 recession, but the growth in long-term unemployment was far more dramatic amongst those with college educations than amongst the broader population. Interestingly, those Americans who had completed their college educations had their long-term unemployment numbers grow by approximately 300% during the period surrounding the recession of 2001, while the overall growth in long-term unemployment was only approximately 200% and the growth in long-term unemployment amongst those with no more than a high school diploma was only approximately 150%.
In the end, real economic pain is more severe for those with fewer resources, and in good times and in bad times, the levels of unemployment amongst educated Americans are far, far below the levels for those who have little education. The recession of 2001 and its aftermath demonstrated that modern recessions have the potential to impose greater pain on well-educated Americans than on those less educated, at least in terms of percentage increases in long-term unemployment.
Troubles Accelerate Amongst the Well Educated
As the New York Times reported yesterday, the current economic downturn has resulted in New York City residents with at least bachelors degrees losing their jobs at more than twice the rate of those who did not finish high school. As the Times noted, highly educated workers often benefit from significant severance packages that mask the true level of their unemployment in the early portion of an economic downturn because those receiving severance payments typically would not apply for unemployment benefits until those severance payments are exhausted. Therefore, the actual growth in unemployment amongst those with college degrees is likely significantly higher than the growth seen in the unemployment statistics, which are based on analyses of those who apply for unemployment benefits.
Manhattan is the borough with the largest percentage of its population possessing at least a bachelor's degree, and the unemployment trends we see in the current economic downturn combine with the intense difficulties facing the financial services sector to create an alarming picture for our borough. Communities with less of their economies linked to the financial services sector and those with less educated populations are likely to face shallower and shorter downturns than Manhattan, unless the New York City and New York State step in to help improve the prospects for Manhattan's workers and would-be workers.
New York State is considering opening an office in Manhattan to support the retraining of well-educated workers and aiding in their job searches, and New York City announced a plan with the same goals (and the additional goal of spurring entrepreneurship) in February. The State program remains under development, and the New York City program uses only $15 million of New York City money and combines it with the $30 million the the federal government is providing to New York City. Unfortunately, $15 million is not nearly a sufficient commitment to the work we must do to combat the rising unemployment in our community.
We hope that our elected leaders, in the midst of their own enormous challenges and undertaking efforts to balance their budgets against a backdrop of declining tax revenues, will make the efforts to reduce unemployment in our city a high priority.