A more affordable city, better attitudes toward work and leisure, finer civic mores—these are silver linings for culture and New York’s luckier people, the ones who are still working or have some other means to get through this crisis. But for those facing financial hardship, which is ultimately what recessions are all about, these improvements are minor consolations. We’ve heard a lot about bankers cast out to sea. But the unemployment rate among unskilled men, particularly African-Americans and Latinos, is disproportionately high. As Mike Wallace points out, a constrained job market often offers the least educated and poorest poor the fewest options. “During the Great Depression,” he notes, “when poor women lost garment-shop jobs, many turned to the street-corner ‘slave markets’ of Brooklyn and the Bronx, renting themselves out for a pittance as domestic laborers, or they resorted to sex trades ranging from taxi dancing to prostitution.”
No one is suggesting things will get that dire this time around. But recessions don’t tend to be moments when cities can expand their social safety nets, and this time is no exception: In order to close the budget gap, Bloomberg is proposing reductions across the board—including cuts in child-welfare centers, homelessness programs, and certain immigrant services. The Spanish-language press produces a steady stream of stories about the devastation of small businesses and the sharp decrease in wages sent back home. “In some cases, the flow of money has reversed direction,” says Alberto Vourvoulias, the executive editor of El Diario. “People are asking relatives at home to go into their savings and send money here. Employment has decreased, but costs of living here remain incredibly high.”
“It’s possible we’ll end up with the good parts of the seventies— a rich bohemian culture—and not the bad,” says NYU sociologist Dalton Conley.
Nor is it just the poorest poor who are suffering. This recession may provide a foothold for some middle-class New Yorkers, but it will just as surely squeeze out others. A fair number of families overleveraged themselves at the peak of the boom, assuming they’d have two incomes, and now find themselves in more precarious arrangements; those who didn’t own homes but are suddenly contending with lost jobs or lower wages are barely scraping by. And for New York families whose mothers stayed at home by choice, rather than necessity, it’s possible this downturn will force them to reconsider the consequences of that decision if their husbands are now unemployed. “The stronger a man’s attachment to breadwinning,” says Stephanie Coontz, author of Marriage, a History, “the more likely he is to salvage his male pride by refusing to do ‘women’s work.’ ” As a rule, able-bodied, unemployed men spend an average of just three and a half extra minutes per day actively caring for their kids, according to Jay Stewart, an economist at the Bureau of Labor Statistics. Most spend their extra time on sleep and “leisure activities” (including almost two extra hours of TV), though they do spend an extra hour and 42 minutes on “unpaid household work,” which includes passive forms of child supervision (like being in the same room).
It’s worth noting that joblessness isn’t just a financial problem. Most recent studies on the subject suggest that the psychological effect of unemployment is even greater than the loss of income that accompanies it. Andrew Oswald, an economist at the University of Warwick, has collected happiness data from hundreds of thousands of people both here and in the United Kingdom, and what he’s consistently seen is that people recover more quickly from becoming disabled, even widowed, than from the long-term loss of a job. “People may draw their benefits from the government,” he says, “but they don’t seem to psychologically acclimate.” Everyone tends to have a natural hedonic set-point, a zone within which their internal mood-thermostat tends to hover, just like their weight. Sustained unemployment is one of life’s few upsets that seems to permanently depress it. Even if this recession is shorter than pessimists predict, those who are laid off in this period will still pay a concrete, long-term price. “It’s what economists call ‘scarring,’ ” explains Oswald. “If I lose my job today, the evidence is that my wages will be 10 percent lower, even a decade from now. Your bad luck follows you.”
One could make the case that those fired during recessions were the least-productive employees anyhow. But the “scarring effect” dovetails with another finding that refutes this theory, and it’s a finding that every 21-year-old wearing a class of ’09 sweatshirt should keep in mind: Those who graduate from college during a recession make less money than those who do not, and these disparities don’t seem to completely erode with time. After looking at hundreds of white men who graduated from college between 1979 and 1989, Lisa Kahn, an assistant professor at the Yale School of Management, came up with an elegant and depressing formula: Each point on the unemployment rate at the time of graduation translates into a 6 percent decrease in starting salary. Specifically: Kids who graduated in 1988, when the unemployment rate was 5.5 percent, made 24 percent more their first year out of school than those who graduated in 1982 (even adjusted for inflation) because the unemployment rate was four points higher, at 9.5 percent. Fifteen years later, there was still a 10 percent differential between them.