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Real, Uglier American Unemployment

Can you trust national averages? As bad as the jobless data you hear are, you have not been told the whole truth. If you think the terrible impact of America’s Great Recession is shown by an official unemployment rate of about 10 percent, think again.

Economic inequality and the myth of Reagan trickle down logic are shown by new data from the Center for Labor Market Studies at Northeastern University in Boston. The report noted: “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.” The researchers found a correlation between household income and unemployment rate in the last quarter of 2009: Look carefully at these numbers and see how unemployment rises as income drops:

$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

Ten times worse unemployment in the lowest class than in the highest class! Truly amazing and disheartening, don’t you think? And you can also infer that in some hard hit geographical areas the poorest people and people of color are being even more adversely impacted. And don’t think for a minute that things have really improved in 2010.

The report summed up the situation: “A true labor market depression faced those in the bottom…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.” People at the top remain winners no matter how bad the whole economy. Why? The wealthy Upper Class controls so much of the political system and benefit from countless government policies. They may lose something in an economic meltdown but not enough to suffer significantly.

Conversely, those at the bottom of the economic system with no political power are experiencing something as bad as the Great Depression, with no end in sight.

What pundits don’t emphasize is that government policies that do not target lower income groups are a failure and disgrace. Worse than destroying the middle class, we are creating a Lower Class like that found in third world countries. Indeed, compared to places like China and European nations, America’s poor are suffering about as badly as anyone on the planet, except for a few dismal places like Haiti. Needing food handouts, losing homes, missing health insurance, and lacking jobs mock the American Dream.

Wait; there is even more bad news. When underemployment is factored in — part time workers who want to work full time, and those who have stopped looking but want a job — the picture gets even worse. In the lowest group, the underemployment rate was 20.6 percent, compared with just 1.6 percent in the highest group. So the total in the lowest class is 51.4 percent (3.7 million people) compared to 4.8 percent in the wealthy class (530,000 people). Now you know why the constantly noted official jobless rate for the nation of 10 percent and 17 percent when underemployment is counted are a joke, or is it a purposeful deception, like a truth bubble?

How can jobs be created for the lower economic classes? You hear very, very few new ideas from politicians. It comes down to federal spending that better targets job creation to the lower income groups, and waiting for more general consumer spending, especially by the more affluent, to create more low level jobs, mostly in service areas. But we need specifics and better legislation.

Consider this green energy fiasco. A huge amount of federal stimulus money provided for building wind farms. It is creating jobs in Chine to build wind turbines, not in America. In fact, 80 percent of such federal funding is going overseas. All because Congress and the White House did not ensure a made-in-America requirement. Was a backroom deal made to keep China happy so that they would keep loaning us money?

When the poorest people suffer so disproportionately as compared to the wealthiest, perhaps only violent revolution will fix America’s dysfunctional, broken and delusional democracy. Will President Obama cite the above frightening data in any public forum to make the case for stronger federal efforts? What do you think? The high numbers for the lower income people mean that no amount of government action, in even five years or more, will solve jobless problem, because no amount of economic growth can possibly create enough new jobs. So, keep making things look better by citing the national average.

About Joel S. Hirschhorn

Formerly full professor Univ. of Wisconsin, Madison, and senior official Congressional Office of Technology Assessment and National Governors Association. Author of four nonfiction books and hundreds of articles.
  • http://www.republicofdave.com Dave Nalle

    Well, I guess advocating armed insurrection is some kind of improvement over the constant flogging of an Article V convention.

    I do have to point out a fundamental flaw in your argument. You don’t take into consideration the possibility that the higher rate of unemployment among the lower income groups is NOT in fact something new, but is a continuation of a long-term pattern which has always been characteristic of our society. A more complete analysis of the historical data suggests that the lower income groups lose jobs most easily, can find new employment most easily and also find it easiest to increase in income.

    So your data seems to be taken out of context and therefore not really saying what you want it to say.

    Dave

  • http://blogcritics.org/ Kerrie Penny

    My interest is in the global phenomenon of unemployment and the use or misuse of statistics that are often manipulated to specific audiences in order to present and publicise their specific cause.

    The needs of people wealthy and poor are unique across the globe, in developed and developing countries. Education, and unfortunately wealth protects those from poverty. Out social support systems, with the exception of Scandinavian countries do not appear to fully embrace the disadvantaged, however, this is not to indicated I am specifically in support of a socialist regime, rather, my message is that all political theories have their strengths and weaknesses. There is a proportion of people within the highest and lowest of social standing that require a more balance understanding and representation. The wealthy in our political environment are a much needed requirement as they fund research and development. The wealthy provide funding in some instances to the poor. Without wealth business would not exist and where would that leave the poor. Our globe cannot look backwards to pre Industrial age, this is ridicluous we have a simulating globe of educated individuals and our policiticans if they choose to really stand up and be counted could make a difference to our world and the human beings that live in adverse conditions.

    Self respect and the Human rights must be a single factor and priority for any government, this includes an honest representation of what is truly occurring within their country.

    These two factors would be a refreshing change to the current practice of power and corruption across the globe. This does not exclude the wealthy here, as the wealthy provide the funding for our media, our policitians and business. The question is how do we influence the wealthy to trust and use their wealth for the betterment of mankind.

    A balanced approach that could embrace the best of conservative and socialist perspectives would be a fantastic solution that could takes us through the next generation.

  • http://etierphotography.blogspot.com/ FCEtier

    Forgive me for daring to tread an area that is not my expertise for a few naive points/questions.

    1) What ever happened to that index they had years ago that compared the number of “help wanted” listings in the want ads to the number of people looking for jobs? Aren’t the classified sections of most papers still listing job openings?
    2) How do the statistics account for people (like several I know) who have been unemployed for months but snub their noses at available jobs? Have gov. benefits become so lucrative that the jobless can afford to be very selective? [Don't get me wrong, I realize some jobs aren't suited to some people but there are abuses on each side of the ledger. Perhaps these abuses skew the stats?]
    3) Your stats seem to indicate that the pundits were correct when they predicted a higher minimum wage would increase the unemployment in the lower economic levels.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    “how do we influence the wealthy to trust and use their wealth for the betterment of mankind.”

    When you find an answer to this question, Kerrie, let me know.

  • Joel S. Hirschhorn

    Want to point out that there have been endless news stories from all over the nation about huge numbers of people waiting on lines to get a chance at a new job – literally hundreds or thousands of jobless trying to get even the lowest level jobs. Also the times jobless are spending trying to get a job are at historic high levels. I don’t think this website appeals to lower class, jobless people; so we hear mostly from the usual snobbish upper class people.

  • Glenn Contrarian

    Joel (and Dave) -

    I thought long and hard about these unemployment statistics when they first came out…and it occurred to me how very misleading they are!

    Think about it – if someone’s making $100K-plus per year, chances are REAL GOOD that he’s employed, right? It only stands to reason that the unemployment rate for the group that’s making a lot of money is very low…because if they didn’t have a job, most of them would be in that group in the first place!

    And the converse is true of those on the lower end – if a guy is making less than $30K per year, there’s a REAL GOOD chance that he’s either unemployed or underemployed…which means that those in this income bracket would certainly have a higher unemployment rate than those in the higher income brackets!

    What a wonderful example of statistical analysis by the pundits without really understanding the logic of why those stats are the way they are!

    Now I will point out once more that unemployment is always, always, ALWAYS the last segment of the economy to improve after a recession or depression. Why? NO businessman is going to hire if his business climate is poor! Businessmen WILL wait until the economy improves…and THEN they will hire!

    Those BC conservatives who are also businessmen should KNOW this already! Hiring will not improve until the economy is stabilized…and last I checked our economy is now growing and the unemployment rate DID fall…and it looks to continue falling right through the November elections wherein the Republicans will still be proclaiming what a massive failure Obama’s economic policies were….

    Oh, and Joel – when it comes to stimulus funds being spent overseas, remember that when Obama first came out with the stimulus package, HE wanted the funding to be restricted to be used only in the U.S., and on products made only in the U.S. You know who came out most strongly against “Made in the U.S.A.”? The Chamber of Commerce! Yep! Once more, the Big Business/Republican cabal came out to defend the right of Big Business, nay, the duty of Big Business to outsource our money and our jobs overseas! Way to go, conservatives! Even after we got a strongly Democratic president and congress, you still found a way to screw up our economy!

    So, um, I think that about handles this topic. Next!

    P.S. I think I’ve also just proven once more Roger’s contention that my comments are becoming a bit too forceful, perhaps even arrogant. It’s wrong of me to do so and I’ve got to work on it – and the first step is acknowledging the problem in the first place.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Wow, Glenn, thank you. But I see nothing wrong with being forceful when combating indefensible positions – even if you’re mistaken for being arrogant.

    I’d consider it my duty to straighten out my fellow women and men whenever they wonder astray. Otherwise, where is the love?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    wander astray . . .

  • http://drdreadful.blogspot.com Dr Dreadful

    Aren’t the classified sections of most papers still listing job openings?

    The job listings used to take up an entire section of our local paper. Now it’s a single sheet consisting of maybe half a page of actual vacancies padded out by ads for job fairs and training seminars.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Yes, they want your money to train you.
    I’ve got my CDL license recently. It’s another thing trying to find a job.

  • cannonshop

    Y’know, it’s funny-this is, I think, the first time I’ve ever seen a “recovery” driven by people exhausting their Unemployment Insurance and thus, dropping off the unemployment rolls (and statistics), thus padding the numbers to look better than they really are.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Joel,

    In response to your #5.

    ;] Not always.

  • Glenn Contrarian

    C-shop -

    Yeah, I know, it’s all a vast conspiracy, and the guv’mint’s just a-makin’ up the numbers just as fast as they can while they get all the black helicopters ready to come take your guns away and force your children to become gay.

    Sarcasm aside, it would do you well to remember that this was the worst recession since the Great Depression – and it’s not something that you can wave a magic wand at and fix. You can’t force businesses to hire workers – you have to fix the business climate so that the business owners will (1) stop firing workers, and then (2) want to hire more workers.

    The wholesale hemorrhaging of jobs has been stopped (700K last January compared to 20 last month). That was the first step. The second step is proceeding apace, since with a growing economy generally comes jobs…and our economy is growing now, instead of shrinking as it was last January.

    Is this really so hard to understand?

    The ship of state canNOT turn on a dime…and the American economy that was teetering on the brink of freefalling down to Depression canNOT become all pink and rosy in just a few months.

    Again, is this really so hard to understand?

    Patience, young padawan. I know you just hates us evil old liberals, but personally, when I compare the results of Obama’s economic policies with the results of 30 years of Reaganomics…

    …thanks, but I’ll stick with the side that gives better results.

  • http://ruvysroost.blogspot.com Ruvy

    Joel,

    I got a question. Can ugly unemployment be fixed with a razor blade? And if so, would you use Schick’s, Gillette’s or Ockham’s?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Much in line, Joel, with your line of reasoning – the recent Huffington Post article on the subject.

    And yes, they’re got it right. The present occupant of the White House is a sissy.

    I know I’m going to inherit wrath from all the partisan hacks (where is Handy, by the way?), but who gives a hoot. Like Alan Kurtz argued in his recent BC article, “Etiquette is to the Blogosphere as Bras are to Cows,” I’m not here to make friends but tell it like it is.

  • Udo, Sydney AU

    The global finacial crisis and high unemployment was created by the very wealthy (mainly from the US).

  • Danny

    Violence will not create jobs.

    Getting a good education will help one get a good job. That and networking with the right people.

    People have lost confidence in themselves, thus they don’t represent themselves well when interviewing. Some how people need to motivate themselves to get beyond all the negativity and move onward and upward.

    Giving up and moaning is not how you get ahead. You’ve got to work it and hussle.

    Also, big gov will not grow the economy. What we need are people willing to take risks to create new businesses. The one thing gov should do is help encourage people to do this. IMHO, this will be a much better treatment for improving the economy than any kind of pork barrel busy work that the gov propagates.

  • Glenn Contrarian

    Results, people. Go with those who give better results. The conservatives have wonderful rhetoric, but they do not have the results to back up their rhetoric.

  • Jeff

    Glenn… there are disturbingly large portions of the world where “intentions” and “efforts” and “hopes” and “prayers” are treated coequally with results. Those places tend to have a very pretty First World frosting of skyscrapers and designer brands, but a stinking, rotten Second World core. (Yes, the city at the southernmost tip of the Malay peninsula which pretends to be a “democratic” “country” certainly qualifies.)

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    A cold dose of reality.

  • Glenn Contrarian

    Jeff -

    I’ve been to Singapore several times – and frankly, I like the place…at least to visit. I remember a tour guide telling us how her brother didn’t score high enough to go to Singapore University…so he went to Cambridge instead. That, and 30% of all individual income is put into a mandatory savings account that can only be used for major expenses like a mortgage, major medical expenses, college, and so forth. I wish we would do the same.

    Yeah, there are things that are not good about Singapore…but there’s a lot of things that are good. I recommend looking at the whole picture instead of only the parts you don’t like.