Study confirms unemployment class disparity

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By now we've all become very aware of nation's http://www.bls.gov/bls/unemployment.htm">unemployment rate which is currently 9.7%, down from the previous 10.0%. But what constitutes the "average" that the media and the BLS report on a monthly basis. A study just released by the Center for Labor and Markets reveals the details behind the oft-reported average, confirming the disparity that exists between classes when it comes to unemployment.

http://www.clms.neu.edu/publication/documents/Labor_Underutilization_Problems_of_U.pdf

Since the onset of the Great Recession of 2007-2009, labor market conditions have deteriorated dramatically for U.S. workers in the aggregate. The basic core facts are generally well known. The number of employed civilians (16+) in December 2009 was more than 9 million below its estimated level in November 2007, the month before the recession got underway. Total unemployment has more than doubled over the past two years, with double digit unemployment rates prevailing between October and December. At the same time, the number of underemployed; i.e., those persons working part time for economic reasons, has also more than doubled, reaching a new record high of 6.4% of all of the employed in the fourth quarter of 2009.1 In addition, the nation’s civilian labor force has actually shrunk by nearly one million over the past year rather than rising by 1.5 million as earlier projected by the U.S. Bureau of Labor Statistics.

What has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets. Earlier work by the authors has shown that a disproportionate share of the losses in jobs and the increases in open unemployment were borne by males, the young (under 30, especially teenagers), the less well educated, blue collar workers especially those in the construction trades, and Black men. Four year college graduates, professional workers, many managers, and government employees were well protected from job losses. Our recent analysis of the rapidly rising numbers of underemployed workers in the U.S. showed both men and women affected to a similar degree but again young workers, less educated workers, especially Black and Hispanic high school dropouts, and blue collar and many service workers were the most adversely affected by the downsizing of the full-time work force. The costs of underemployment are frequently quite severe in both lost hours of work and lower hourly wages, and sharply reduced weekly earnings.

...snip...

http://www.clms.neu.edu/publication/documents/Labor_Underutilization_Problems_of_U.pdf

The rest of the article lays out the data using charts. This is what they found:

INCOME ---------- PERCENTAGE UNEMPLOYED

$150,000 or more, 3.2 percent

$100,000 to 149,999, 8 percent

$75,000 to $99,999, 5 percent

$60,000 to $75,000, 6.4 percent

$50,000 to $59,000, 7.8 percent

$40,000 to $49,000, 9 percent

$30,000 to $39,999, 12.2 percent

$20,000 to $29,999, 19.7 percent

$12,500 to $20,000, 19.1 percent

$12,499 or less, 30.8 percent


From the report:

As noted in the introductory section of this paper, the underemployment rates of workers also varied to a very substantial degree across household income deciles in the fourth quarter of 2009. Workers in the lowest income households faced an underemployment rate of nearly 21% (Table 3 and Chart 3). More than 1 of every 5 workers in this income group was working part-time for economic reasons in the fourth quarter. The average underemployed worker only obtained 22-23 hours of work versus a mean of nearly 43 hours for their full-time employed peers. The incidence of these underemployment problems also fell steadily and considerably as we move up the income distribution, dropping to 6.1% for workers in the fifth decile to 3.6% in the eighth decile and to a low of only 1.6% for those workers in the top decile of the income distribution. Employed workers in the lowest income decile were 13 times as likely to be underemployed as workers in the top decile of the nation’s income distribution in the fourth quarter of 2009. Again, workers at the bottom and top of the income ladder were encountering dramatically different labor market problems.

This is alarming confirmation that a vast segment of our society is firmly locked into an economic depression. Meanwhile, the middle class is steadily descending into an economic abyss already occupied by the least fortunate among us.

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1. K&R