America has always been a country that thrives on hard work, thrift and self-reliance. We have all absorbed Benjamin Franklin's maxim: “Early to bed and early to rise, makes a man healthy, wealthy, and wise.”

This helped create jobs. In an application of Schumpeter's notion of creative destruction, the US lost 44m jobs in the last two decades of the 20th century, but simultaneously created 73m private sector jobs. A stunning 55 per cent of the total workforce was in new jobs by the turn of the century, two-thirds of them in industries that paid more than the average wage. This is no fluke. It is because we benefit from a unique brand of entrepreneurial bottom-up capitalism.

Today there is no evidence of job creation. Quite the opposite: unemployment is rising and millions of jobs have disappeared. In place of thrift we have become a nation of debtors, staggering beneath mortgages that exceed the value of our homes, and credit lines that exceed our ability to repay. But the “Great Recession” has also changed the nature of unemployment, making it harder for those out of work to find a job. Only by investing in infrastructure and innovation can we mend the system.

About a third of the 15m jobless have been out of work for at least six months. This is the highest proportion since records began in 1948. Meanwhile, those in jobs find their work week reduced to an average of 33 hours, again the lowest in 60 years. Businesses are cutting hours, wages and benefits rather than laying off still more workers. Today all elements of labour income – jobs, hours and wages – are under pressure.

Many Americans who lost their jobs now have no way to replace their lost income. Take unemployment benefits, which pay about a third of the lost salary, up to a cap. Generally, the requirement for the benefit is to have worked full time on the last job for at least a year. But more than half the unemployed do not qualify because they had been in their jobs for less than a year before the axe fell; or worked part-time; or were independent contractors. Only 43 per cent are eligible for unemployment benefits. Even for them, the anxiety is intense: 61 per cent worry their benefits will expire before they find a job. This is driven home by the dramatic increase in those dependent on food stamps, up by 6.2m since the recession began. Food stamps now feed a near-record one in nine Americans.

These men and women are well aware that long-term unemployment will make them harder to re-employ. Their fears are justified: there are now nearly six people available for every job opening – up from 1.7 per opening when the recession began.

The mix of the labour force has also changed. The proportion of over-55s working has risen 8 per cent. They felt forced to keep labouring away because the value of their homes and investments declined. In fact, 63 per cent of workers aged 50 to 61 expect to delay retirement, thus restricting openings for younger workers. During the last two recessions, those in their mid-40s to mid-50s showed employment gains, while younger workers bore the brunt of cutbacks.

Of course this time younger workers have not escaped – a quarter of teenagers, about 1.6m youths, are without work. The unemployment rate for young Americans has exploded to 52 per cent, a post-war high. But even the 45-to-54 age group has seen job losses, with employment down by more than 1.2m. These are people who should be in the prime of their wage-earning years. It will take these older workers longer to find jobs; some will have to settle for considerably less pay.