More give up on hunt for jobs

Many jobless people have reached a conclusion that captures the depth of the unemployment crisis: Looking for a job is a waste of time.

The economy is growing. Yet it’s creating few jobs. That’s why in the past eight months, 1.8 million people without jobs left the labor market. Many had grown so frustrated by their failure to find a job that they threw up their hands and quit looking for one.

And it’s why Barbara Bishop sat down at her kitchen table in suburban Atlanta last month and joined their ranks. Her decision came seven months after she quit a PR job that seemed about to be axed. Sending out resumes got her nowhere. So Bishop made a list of her skills and decided to launch her own business.

“I don’t want to look anymore,” she said of the job hunt. “It’s become very discouraging.”

The nation’s unemployment rate is 9.7 percent. But so many jobless people have quit looking that if they’re combined with the number of part-time workers who’d prefer to work full time, the so-called “underemployment” rate is 16.5 percent.

Their outsize numbers show that even though the economy is growing, the job market is stagnant. Employers remain reluctant to hire.

The exodus did halt in January, when a net total of 111,000 people re-entered the job market. But 661,000 had left in December. And the overall trend since spring has been people leaving the work force.

“It’s very unusual,” said Mark Zandi, chief economist at Moody’s Economy.com. “At this point in the business cycle, we should be seeing some sort of labor force growth. Layoffs have abated, but there really has been no pickup in hiring.”

Job creation was stronger early in previous recoveries. And jobless people responded by streaming back into the labor force. Even before the 1990-1991 and 2001 recessions ended, for instance, more people entered than left the job market, according to an analysis by Moody’s Economy.com. The work force did shrink after the severe 1981-1982 recession ended – but not as severely as it has this time, the analysis shows.

Some workers are concluding it’s more practical to return to school, start a business or care at home for their kids until the job market improves. In some cases, it even makes financial sense to stop looking for work.

Jennifer McDonald, for example, decided she could help her family more by staying home than by hunting for jobs that don’t seem to exist near her home in Elizabethtown, Pa. Laid off as a receptionist a year ago, McDonald spent months searching for work as a receptionist or store clerk.

She and her husband ultimately decided that with two kids, her staying at home made more sense: It would save roughly $300 a week on child care, along with gas money and time shuttling the kids. The savings would help stretch her husband’s income from an auto-body shop.

Besides, there were no jobs anyway.

“If you’re just sitting there working on the computer all day, not getting paid to do it, it’s not very profitable,” she said.

Those leaving the work force have been beaten down by the competition for few jobs. A record 6.4 unemployed Americans, on average, are vying for each job opening, according to the most recent Labor Department data. That’s up from 1.7 jobless people per opening in December 2007, when the recession began. And a record 6.3 million people have been jobless for at least six months.

Even if the economy continues growing this year, it won’t likely recover many of the 8.4 million net jobs that vanished in the recession. Economists say the nation would be fortunate to get back 1.5 million of those jobs this year.

Part of the problem is that outsized growth in the real estate and construction industries disappeared when the housing bubble burst. Many of those jobs are gone for good.

Construction of homes, for example, could jump 30 percent this year to an annual rate of 715,000, said John Lonski, chief economist of Moody’s Capital Markets Research Group. But the industry won’t be rehiring many who lost jobs after 2007. That year, there were 1.3 million housing starts.

The economy would have to grow at an average rate of 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point. Yet most analysts think the economy will grow 2.5 percent or less for the year.

That leaves workers hunting for jobs the economy won’t likely create for months or even years.

As head of the Go! Network group in St. Louis, Chuck Aranda has seen how the slog of job hunting wears people down. His networking group offers seminars and breakfast meetings to get frustrated job-hunters out of the house.

“I think there are people who are doing this alone,” Aranda said. “They’re in their basements, they’re on the Internet. And they’re getting disconnected. They lose hope.”

At some point, the exodus will reverse. Zandi thinks many will return by the second half of the year, once it appears employers have ramped up hiring.

Others will start looking again when their jobless benefits expire. Workers receive 26 weeks of regular unemployment benefits, plus up to 73 more weeks of extended aid depending on their state’s unemployment rate.

Yet for many, the struggle may not end once the job market improves. As more Americans re-enter the work force, Zandi says competition will tighten.

Yes, more jobs will be created. But a greater number of people will likely compete for them. That’s why Zandi thinks the unemployment rate could creep up above 10 percent.

“Even if the job market gains some traction this year, unemployment is going to rise,” he said.