While the current recession is causing millions of Americans real and tangible pain today, the wounds inflicted by the current economic climate may prove to be more long-lasting and damaging than originally thought. This is the argument espoused by Don Peck in his recently released book, Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It. The book, which is based upon Peck’s cover story from the March 2010 issue of The Atlantic Magazine, details how the lingering effects of this recession will be felt by those hardest hit for the remainder of their professional lives. As Peck stated, “[l]ong recessions leave deep, permanent scars on society.” The event was moderated by Kent Hughes, the Director of the Program on America and the Global Economy.
Peck began by bringing the audience back to the spring of 2009. Lehman Brothers had collapsed. TARP (The Troubled Assets Relief Program) had been signed into law by President George W.Bush and the Federal Reserve had been active on a number fronts. When President Obama was inaugurated in January of 2009, the economy felt as if it were in free fall; some 750,000 jobs were lost in that first month. The nation was holding its collective breath in an attempt to weather the storm. Many of the economists Peck spoke with warned that our sigh of relief was premature.
It was during this time that Peck interviewed economists who first told him that this recession will have more than a cursory impact on those adversely affected. Peck stated that for these individuals “there really was a lifelong impact.” This lifelong impact was especially felt by the young with limited education who had only recently entered the workforce. Starting in very difficult circumstances, this group “quite literally never caught up,” Peck argued.
This phenomenon is not unique to the current moment in time. Peck discussed the recession of the early 1980’s and found that those who entered the workforce during that downturn were still suffering the consequences twenty years later. Among the issues they faced were the fact that they were disproportionally in non-professional jobs, they were well behind on income, and they clung more tightly to their careers. As Peck researched further he found that similar experiences were reported throughout American history, including the 1970’s, the end of the gilded age, and, of course, the Great Depression.
After speaking with sociologists as well as economists, Peck also noted that these recessions can have more than just an economic effect. He argued that “the character of these up and coming generations can change.” These periods especially have a profound impact on young men. After the Great Depression, Peck cited research showing that some of the men who came of age at that time displayed a sense of fatalism, powerlessness, and a lack of agency. Additionally, Peck cited research in which the long-term unemployed were much more likely to pull away from friends and have strained family relationships.
Peck then went into a more detailed account of how his book addresses these myriad facts. First, Pinched looks at how society is changing, how it has changed, and how it will continue to change. The biggest change, which Peck also noted is the biggest problem, is that of the chronically unemployed. While unemployment is at historic highs and durations, Peck expressed a fear that such unemployment tends to become permanent for a number of reasons. “The longer people spend out of the job market the harder it is for them to get back in,” Peck argued, which has a profound effect on the American economy as a whole.
Secondly, the book looks at the deeper, more long-term economic trends and how this recession is accelerating some of them. Like other recessions, Peck noted that companies are now restructuring, off-shoring, and substituting technology at higher rates than prior to the recession. Furthermore, unlike the higher and lower skilled positions, this recession has seen a large deterioration in the amount of jobs available in the middle. These jobs are the ones that, according to Peck, “have formed the backbone of the American middle class.”
Lastly, Pinched looks at how we can recover. Given the nature of this recession Peck urged that the solutions need to be “wide and varied.” In the short term Peck favored some form of stimulus to help increase growth. As for a longer term solution, Peck noted that “the backbone of the U.S. economy, and any rich economy, is technological progress… and there are a variety of measures we can take to jumpstart that growth.” Peck also suggested greater investment in science and R&D, an immigration policy that would allow the entry of more high skilled foreign nationals, and. of course. Peck urged that we “support people who have been felled by this recession.”
By: Clark Taylor
Kent Hughes, Director, Program on America and the Global Economy