Long-Term Jobless Find a Degree Just Isn’t Working

Times Staff Writer

Dan Gillespie never thought he’d have to look so hard for work.

When the Seattle-area resident left the Air Force in 1980, he earned a computer science degree and enjoyed 20 years of steady work. He saved enough money to buy his wife’s childhood home last year.

Three months later, he was laid off.

Gillespie, 53, hasn’t found a job since. Even the corner store won’t hire him. He and his wife sold the house last month.


“The computer jobs are gone,” he said. “So what’s next? We can’t all move into gene splicing.”

Long-term unemployment, defined as joblessness for six months or more, is at record rates. But there’s an additional twist: An unusually large share of those chronically out of work are, like Gillespie, college graduates.

The increasing inability of educated workers to quickly return to the workforce reflects dramatic shifts in the economy, experts say. Even as overall hiring is picking up and economic growth remains strong, industries are transforming at a rapid pace as they adjust to intense competition, technological change and other pressures.

That means skilled jobs can quickly become obsolete, while others are outsourced. Educated workers are increasingly subject to the job insecurities and disruptions usually plaguing blue-collar laborers, but various factors make it even harder for some educated workers to get back into the workforce quickly. Though a college education is still one of a worker’s best assets, it’s no guarantee that a worker’s skills will match demands of a shifting job market.

The advantages of a college degree “are being erased,” said Marcus Courtenay, president of a branch of the Communications Workers of America that represents technology employees in the Seattle area. “The same thing that happened to non- college-educated employees during the last recession is now happening to college-educated employees.”

Even with better-than-expected job growth, 373,000 people with college degrees quit job hunting and dropped out of the labor force last month, the Labor Department reported Friday.


The number of long-term unemployed who are college graduates has nearly tripled since the bursting of the tech bubble in 2000, statistics show. Nearly 1 in 5 of the long-term jobless are college graduates. If a degree holder loses a job, that worker is now more likely than a high school dropout to be chronically unemployed.

That change is occurring as it is getting harder for all jobless to get back into the workforce.

Since the 2001 recession, about one-fifth of the unemployed have been out of work for more than six months -- and that proportion has steadily crept up even as the unemployment rate has fallen. The percentage of jobless who are chronically unemployed is even higher in California -- 23.3% last month, versus 20.5% nationwide.

Even with the national unemployment rate at a relatively low 5.4%, the share of those out of work for more than six months is higher now than during the early 1980s, when the jobless rate was in the double digits, analysts say. The average length of unemployment is also higher now than at any time other than the early 1980s.

Analysts cite several reasons for the growing vulnerability of educated workers to long-term joblessness.

For one, the number of college graduates has steadily risen over the decades. So it’s natural that more will also lose work.

Tech workers, in particular, are victims of their successes during the 1990s, when many high-tech companies went on hiring binges and wages soared.

“They basically stockpiled workers,” said Mark Zandi, an economist with Now those companies have gotten rid of their overstock.

Higher pay commanded by college graduates also is a factor. Wage differentials between those with and without college degrees are at record highs. Those relatively well-paid professionals may take longer to find work because they are more reluctant to accept lower-paying work -- although many ultimately do.

Educated professionals also have assets, such as stocks and homes, that can help tide them over. But digging into those assets can be painful, as Khaled Amer learned.

Amer’s consulting business hasn’t had a client since June. The electrical engineer hasn’t found work in months, and as chairman of an Orange County chapter of the Institute of Electrical and Electronics Engineers, he says he knows of hundreds of others in similar straits. His wife recently lost her accounting job when the small manufacturing firm she worked for folded.

The couple are surviving by living off a home equity loan.

“That has been a saving grace,” said Amer, 46.

But the Amers had been hoping their house in Irvine would finance their retirement.

The problems of long-term unemployment are even more pronounced for older workers, for whom retirement issues loom large. The number of long-term unemployed who were 45 or older doubled from 2000 to 2003. That comes as studies show that the elderly are having to work longer and put off retirement.

John Challenger, chief executive of Chicago-based outplacement firm Challenger, Gray & Christmas, said older workers often face age discrimination but may also face a tougher time adjusting to the increasingly shifting skills needed in the workplace.

“There are more and more specialists,” Challenger said. “And if there are more and more specialists in an information economy, you get people whose skills aren’t as portable as they used to be.”

Paul Kostek, an official with the IEEE, said employers had become pickier about what skills they wanted.

“When there’s a lot of people out in the marketplace, companies can afford to say we want someone truly with this experience, not someone who just says, ‘Well, I’ve taken a couple of classes in this area,’ ” he said.

Getting retrained is also increasingly difficult. Job-training funds have been steadily cut over the decades. Fields that are booming, such as nursing, can require years of study that some jobless cannot afford.

Virginia Johnson of San Jose lost her job as a supply manager for a Silicon Valley firm in January 2003. Except for a nine-month temporary stint, she’s been out of work since then. Among the many things she’s had to put off is returning to school to finish her business degree.

“Having this time off work would have been great if I’d had the money to go to school,” said Johnson, whose unemployment insurance runs out next month.

It’s getting tougher to keep pace with the changing job market, analysts say. Two economists at the Federal Reserve Bank of New York studied job losses during the last three recessions and concluded that the most recent one, in 2001, involved “structural” changes in industries rather than the usual ups and downs of the business cycle.

That means that certain jobs may never be replaced. For example, jobs designing computer chips may vanish because of fundamental changes in chip design or production or because the industry has shipped the jobs overseas, experts say. Or businesses’ efforts to boost productivity may mean that computer programs shrink the number of loan officers needed to process applications at a bank.

Erica Groshen, a co-author of the New York Fed study, noted that though the United States manufactures less, white-collar workers increasingly produce goods and services on Information Age assembly lines.

“Instead of a room of auto workers,” Groshen said, “you’ve got a room of insurance brokers.”

Those white-collar assembly-line workers are the most vulnerable to changes in the globalized economy, experts say. “These are the types of people who are going to have their jobs under the threat of outsourcing,” said Sylvia Allegretto, an economist with the liberal Economic Policy Institute in Washington.

Keith Michaelson feels buffeted by those changes. He used to be a schoolteacher in rural Michigan. When the local school district ran out of money, he studied computers and worked at a Wisconsin-based technology company for 10 years until it was bought out and closed.

Michaelson moved to Los Angeles to work as a computer troubleshooter. He survived one layoff in 2001 and got a job at a local nonprofit. But he lost that post last September and has been looking for work ever since.

Michaelson said he barely recognizes the job market nowadays. “The market changes a lot faster now than it used to,” he said.

In the meantime, Michaelson is living in a West Los Angeles apartment and surviving off his savings. “Sometimes I wonder, was it worth it for me to go to college or not?” he said. “I’m 45 and not working, I don’t have much money put aside for retirement.... This is my retirement [I’m spending], and I’ll be working until I keel over.”