News Digest: Pinched

The following is an event summary from a book discussion hosted by the Program on America and the Global Economy on August 8, 2011.

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 disproportionately 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.