There is a great tendency in this country to refuse to see what is right in front of everybody’s eyes.
When it comes to employment, there are roughly three broad categories in the United States. The folks in the upper-income group are not suffering much, if at all, from the profound reversals in employment brought about by the Great Recession. Those in the middle have been hit hard. The job losses there have been severe and long-lasting. But for those in the lower-income groups, the scale of the employment crisis has been mind-boggling.
What you’re not hearing from the politicians and the talking heads is that the joblessness and underemployment in America’s low-income households rival their heights in the Great Depression of the 1930s — and in some instances are worse. The same holds true for some categories of blue-collar workers. Anyone who thinks this devastating problem is going away soon, or that the economy can be put back on track without addressing it, is deluded.
There has been talk about income inequality over the past several years, but what is happening now is catastrophic. The Center for Labor Market Studies at Northeastern University in Boston divided American households into 10 groups based on annual household income. Then it analyzed labor conditions in each of the groups during the fourth quarter of 2009.
The highest group, with household incomes of $150,000 or more, had an unemployment rate during that quarter of 3.2 percent. The next highest, with incomes of $100,000 to 149,999, had an unemployment rate of 4 percent.
Contrast those figures with the unemployment rate of the lowest group, which had annual household incomes of $12,499 or less. The unemployment rate of that group during the fourth quarter of last year was a staggering 30.8 percent. That’s more than five points higher than the overall jobless rate at the height of the Depression.
The next lowest group, with incomes of $12,500 to $20,000, had an unemployment rate of 19.1 percent.
These are the kinds of jobless rates that push families already struggling on meager incomes into destitution. And such gruesome gaps in the condition of groups at the top and bottom of the economic ladder are unmistakable signs of impending societal instability. This is dangerous stuff. Nothing good can come of vast armies of the unemployed just sitting out there, simmering.
When the data about underemployment is factored in — meaning individuals who are working part time but would like to work full time, and those who have stopped looking but would take a job if one were available — the picture only worsens. In the lowest group, the underemployment rate was 20.6 percent, compared with just 1.6 percent in the highest group.
The people suffering the most drastic employment reversals in this recession have been those who were in the lower-income groups to begin with — the young, less well-educated workers, especially black and Hispanic high school dropouts, and certain categories of service workers, such as food preparers and building cleaners. Blue-collar workers were also hammered, especially those in the construction industry.
This is not to say that the middle class has not been hurt badly by the recession. It has been. In last year’s fourth quarter, the group with household incomes of $40,000 to $49,000 had a jobless rate of 9 percent, close to the disastrous national average. The $50,000 to $59,000 group had a 7.8 percent jobless rate, and households earning $60,000 to $75,000 had a jobless rate of 6.4 percent.
The point here is that those in the lower-income groups are in a much, much deeper hole than the general commentary on the recession would lead people to believe. And none of the policy prescriptions being offered by the administration or the leaders of either party in Congress would in any way substantially alleviate the plight of those groups.
We talk about the recession as if all of its victims were suffering equally, and all will be helped by some bland, class-and-category-neutral solution.
That is so wrong. As the Center for Labor Market Studies explained in its report: “A true labor market depression faced those in the bottom two deciles of the income distribution; a deep labor market recession prevailed among those in the middle of the distribution, and close to a full employment environment prevailed at the top.”
Those who believe this grievous economic situation will right itself of its own accord or can be corrected without bold, targeted (and, yes, expensive) government action are still reading from the Ronald Reagan (someday it will trickle down) hymnal.