Economy

Job-Market Pessimism Reaches New High

by Dennis Jacobe, Chief Economist

Ninety percent say now is a bad time to find a quality job

PRINCETON, NJ -- The percentage of Americans saying now is a "bad time" to find a quality job reached 90% in February -- up 30 percentage points from January 2008, and the highest level since Gallup began asking this question in October 2001.

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The prior high point in pessimism on this measure was 88% in December 2008. Before the recent economic downturn, the high point was 81% in both March and August 2003, around the beginning of the Iraq war.

And while the Gallup trend line has never found more than 49% of Americans saying now is a good time to find a quality job, several polls conducted by the University of Connecticut and Rutgers University in the late 1990s and 2000 found 69% or more of Americans in the labor force optimistic about the job market.

Most Important Problem

Surely the surging of the U.S. unemployment rate from 4.9% in January 2008 to 7.6% in January 2009 has contributed to the record-high pessimism about finding a "quality" job. Another indication of the country's growing jobs problem is the sharp increase in the percentage volunteering that unemployment is the nation's most important problem. In January 2008, only 5% of respondents suggested this as the country's most important problem. By January 2009, this had jumped to 11%, before it essentially doubled to 20% in February. This is the highest degree of concern about jobs expressed by Americans since the 20% measured in February 2004.

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The current high level of worry about unemployment is more consistent with sentiment during the recession of the early 1990s (when Gallup found as many as 27% mentioning jobs as the nation's most important problem) than it is with the 40% to 50% range recorded during the early 1980s recession, with its double-digit unemployment rates. Still, if expectations of continued economic decline in the months ahead are correct, February's near-doubling of "jobs" on the "most important problem" measure may be only the start of a sharp deterioration in this trend.

A Note on "Underemployment"

Of course, right now there are a variety of Gallup and other job-market measures indicating that U.S. jobs are disappearing at a rapid pace. However, Gallup's quality-job question taps into not only Americans' perceptions of the unemployment rate, but also their sense of the availability of good jobs. In this context, this jobs measure might reflect, at least in part, "underemployment": that is, a situation in which Americans feel compelled to take jobs that do not fully make use of their talents, skills, and experience.

In this regard, the unprecedented government interventions into the U.S. economy seem to hold little promise for the overall jobs market, let alone the so-called underemployed. The expansion of unemployment-related government benefits in the stimulus bill the president signed Tuesday should help cushion the fallout from increasing numbers of unemployed. The middle-income tax cut included in that same legislation may be of modest help to those who are newly underemployed, as it will add a few dollars a week to their paychecks.

However, the surge in the percentage of Americans voicing the view that unemployment is the most important problem facing the nation, combined with the record pessimism about the ability to find a "quality" job, reflect a growing fear about jobs. In turn, job fears tend to reinforce the current consumer spending pullback. And, neither the unprecedented stimulus bill nor the president's new housing initiative is likely to help create a significant number of new jobs -- let alone new "quality" jobs -- anytime soon, though the stimulus bill is projected to add jobs over the next several years.

Of course, most jobs are created by small businesses. Getting the credit system functioning once again would help small businesses, consumers, and the economy as a whole. But at some point, as job worries continue to increase, government initiatives will likely move toward encouraging the creation of quality jobs. Getting the economy to once again create such jobs is key not only to halting the current economic plunge, but also to stimulating a real and sustainable economic recovery. In turn, this may mean focusing on what can be done to improve things for private-sector small businesses -- not virtually ignoring them, as seems to be the case at this point.

Survey Methods

Results are based on telephone interviews with 1,022 national adults, aged 18 and older, conducted Feb. 9-12, 2009. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points.

Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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