Policy Brief #30, March 2012

The National Poverty Center’s Policy Brief series summarizes key academic research Problems in the Wake of findings, highlighting implications for policy.

The NPC encourages the dissemination of the Great : Findings from the this publication and grants full reproduction right to any party so long as proper credit Michigan Recession and Recovery Study is granted the NPC. Sample citation: “Title, Alix Gould-Werth and Sarah A. Burgard, University of Michigan National Poverty Center Policy Brief #x”.

About This Report Report Overview From December 2007 through June A person is counted as unemployed when This report focuses on the employment 2009, the experienced its she/he is not working for pay and is situation in Southeast Michigan in the most severe recession since the Great actively searching for employment. If we wake of the . It analyzes Depression. Though the National Bureau consider their status at the time of their data collected in the first wave of the of Economic Research officially declared interview, which occurred for respondents Michigan Recession and Recovery the end of the recession in June of 2009, over the months of October 2009 through Study (MRRS), a panel study of a high rates of unemployment have persisted March of 2010, 18% of MRRS respondents stratified random sample of 914 English- into 2012. Michigan is among the states were unemployed. speaking adults aged 19 - 64 who lived in hit hardest by the recession, especially the the Detroit Metropolitan area (Wayne, The unemployment rate is calculated Detroit Metropolitan area, which has long Oakland and Macomb counties). Wave by dividing the number of unemployed been the center of the automobile industry. 1 data collection began in October 2009 individuals by the number of people in the and was completed in April 2010, with The Great Recession and its aftermath have labor force (unemployed plus employed a response rate of 82.8% . A second wave impacted the employment and incomes individuals). The unemployment rate for of data collection took place between of a wide swath of residents. Black and MRRS respondents in October 2009 was April and August 2011, with a response non-black, male and female, blue-collar 21.6 %, about twice the national rate in rate of 93.9%. Analysis of the second and white-collar Michiganders experienced October 2009, which was 10.2%, according wave of data is forthcoming. layoffs, furloughs, cuts and other to the Bureau of Labor Statistics. The employment and economic shocks. As is the rate is also significantly higher than the This research was funded by the Office case nationally, employment problems were October 2009 unemployment rate for the of the Assistant Secretary of Planning concentrated among workers who are less- state of Michigan, 15.3%, likely because of and , U. S. Department of educated, blue-collar and African American. the area’s high numbers workers in the auto Health and Human Services, the Office and other manufacturing industries which of the Vice President for Research This report examines the employment were hard-hit by the Great Recession. at the University of Michigan, the problems of three groups at the time of Ford Foundation and the John D. and the first survey: those who were employed, Further, 32% of all MRRS respondents Catherine T. MacArthur Foundation. those who were unemployed; and those reported being unemployed in at least who were not in the labor force. one month between January 2007 and

Gerald R. Ford School of Public Policy, University of Michigan www.npc.umich.edu of interview; 5% received Temporary Figure 1. Employment Status at Time of Interview Assistance for Needy Families; and 32% received Supplemental Nutrition Assistance Employed, 67% Source: Data were taken Program benefits (formerly known as Food from Wave 1 of the Michigan Stamps). At the time of interview, 42% of Recession and Recovery Study. Respondents are Southeast unemployed respondents reported that they Michigan Residents, ages 19-64. were not receiving assistance from any of Unemployed, 18% these three programs. Problems among the

Not in Labor Force, 15% Currently Employed Many employed respondents were also affected by the Great Recession. Among those who were working when interviewed, September 2009. Even among those with was higher—one in three—among about one in four had experienced at least a bachelor’s degree or more , 20% blue-collar workers. Blue-collar workers one month of unemployment during the 33 of respondents were unemployed in at least were both more likely to experience months preceding the interview. Further, one month during this period of 33 months. unemployment and more likely to 36% had experienced one or more of the However, experiences were even worse experience a long spell of unemployment. following problems in the 12 months prior among those with less than a high school Further, black workers who experienced at to the interview: a lay-off, furlough, or diploma, among whom 45% experienced at least one month of unemployment between wage reduction. These problems were least one month of unemployment. January 2007 and their interview were more concentrated among black, male, also unemployed for a greater number of African American respondents were and blue-collar respondents: 42% of black months than non-black respondents: 16 much more likely than non-blacks to have respondents reported experiencing a , months compared to 11 months. experienced a month of unemployment furlough, or wage reduction in the previous between January 2007 and September Unemployed respondents reported year, as did 40% of males and 47% of blue- 2009: the figures were 46% and 28% extensive financial hardship: 96% indicated collar respondents. respectively. Blue-collar workers were more that it was a financial problem that they Another less-recognized problem for the likely to be unemployed in any month were not working. This percentage was employed is perceived job insecurity. Belief than white-collar workers: 42% versus higher among those who had experienced that one’s job is at risk can have serious 25%1. Female workers were less likely to six or more months of unemployment (98%) consequences, including worsened health for experience unemployment than male and blue-collar respondents (99%). the worker and lower levels of productivity workers, 28% versus 37%. A variety of social programs exist to assist for the firm.2 17% of employed respondents The length of unemployment spells the unemployed and the poor: 37% of perceived that they were somewhat or very also varies by race, gender, educational the currently unemployed had received likely to lose their job in the next 12 months, attainment and occupation. Longer spells prior to the time a high percentage compared to national of unemployment are associated with increased rates of material hardship, mortgage default, and difficulty securing 18% 24% re-employment. About one in four of people who were classified as “Not in Labor of men “not in the labor force” had worked in respondents experienced six or more Force” had worked in the previous year the previous year months of unemployment, and the rate

1. Respondents are defined as “blue-collar” if their current or most recent occupation is in one of the following fields: manufacturing, extraction, transportation, crafts, farming, fishing, forestry, or service occupations. Respondents are defined as “white-collar” if their current or most recent occupation is in one of the following fields: managerial, professional, technical, sales or office. 2. Burgard, Sarah A., Jennie E. Brand and James S. House. 2009. “Perceived Job Insecurity and Worker Health in the United States.” Social Science and Medicine 69(5): 777-785; Greenhalgh, Leonard. 1984. “Managing the Job Insecurity Crisis.” Human Resource Management 22(4):431-444.

www.npc.umich.edu 2 Figure 2. Percentage of Working-Aged Adults Experiencing Unemployment

all non-black black female male has BA no BA white- blue- degree degree collar collar

rates.3 Perceived job insecurity, too, is more Further, 66% of MRRS respondents pronounced among African American who were not in the labor force reported 74% and blue-collar workers, with 30% of black that it was a financial problem that they of people report having a friend/family member workers and 27% of blue-collar workers were not working. This percentage was who has lost a job perceiving their to be at risk. substantially higher for black respondents: 79% of black respondents reported Not in the Labor Force financial difficulty, compared with 59% of The third category, “Not in the Labor non-black respondents. 95% Force,” includes respondents who are not Thus, many of the MRRS respondents of those who were asked to provide material working for pay and not looking for work. not currently in the labor force have recent assistance to a friend/family member who lost This group includes homemakers, students, work histories, and even more of them are a job, did so early retirees, individuals with disabilities experiencing financial difficulty. who are unavailable for work, as well as “discouraged workers” who would likely Social Support in Times of search for work if they thought jobs were 69% available for them. Economic Distress of those who provided support reported that it Three out of four respondents reported While they were not working or looking caused them personal financial strain that at least one friend or family member for work in late 2009 or early 2010 when lost work during the recession. Of those interviewed, almost one in five respondents who reported knowing someone who lost who were not in the labor force had work, 70% reported having three or more worked in the year prior to interview. friends or family members who lost a job. Higher percentages of men—about one in four—who were not in the labor force had Further, 39% of respondents who had a worked in the past year. friend or family member who lost a job

3. Burgard, Sarah A, Lucie Kalousova, and Kristin S Seefeldt. 2012. “Perceived Job Insecurity and Health : The Michigan Recession and Recovery Study.” (January).

3 NPC Policy Brief #30 reported being asked to provide material About the Authors help to them. Of those asked for help, Figure 3. Percentage of People Not Alix Gould-Werth is a Ph.D. student in 95% provided financial assistance, food, in the Labor Force Who Report the joint program in Social Work and clothing, transportation or housing to Hardship Due to Lack of Work Sociology at the University of Michigan. someone who had lost a job. They provided [email protected] help even though two thirds reported that providing assistance caused them personal Sarah A. Burgard is an Associate Professor financial strain. These results suggest that of Sociology, an Associate Professor of networks of social support are important Epidemiology, and a Research Associate sources of economic assistance during Professor at the Population Studies Center times of widespread economic distress. at the University of Michigan. [email protected] Implications Findings from the first wave of the MRRS are consistent with results of other surveys all non-black black conducted during the Great Recession and subsequent recovery: many employed, as well as unemployed, respondents experienced serious labor market and levels, our data reflect gaps in the coverage financial hardships. Our data further allow of government programs: only 1 of every us to look in-depth at the employment 2 unemployed respondents had accessed situation in the Detroit Metropolitan SNAP, Unemployment Insurance or cash area—one of the areas hit hardest by welfare in the year following job loss. the recession— to examine the nature Further research with Wave 2 data will NPC activities are currently supported with of employment problems and strategies examine more thoroughly where social funding from the Ford Foundation, John D. and employed by respondents to ameliorate support and the social safety net are Catherine T. MacArthur Foundation, Russell Sage hardship. Though these respondents assisting Michigan residents suffering from Foundation, U.S. Department of Agriculture, as report helping one another at very high job problems, and where these mechanisms well as generous support from units within the are falling short. University of Michigan, including the Gerald R. Ford School of Public Policy, Office of the Vice President for Research, the Rackham , and the Institute for Social Research.

National Poverty Center Gerald R. Ford School of Public Policy University of Michigan 735 S. State Street Ann Arbor, MI 48109-3091 734-615-5312 [email protected]

www.npc.umich.edu 4