Employment gap between rich, poor widest on record

Middle-income workers are increasingly pushed into lower-wage jobs
Associated Press
Sep 17, 2013

The gap in employment rates between America's highest- and lowest-income families has stretched to its widest levels since officials began tracking the data a decade ago, according to an analysis of government data conducted for The Associated Press.

Rates of unemployment for the lowest-income families — those earning less than $20,000 — have topped 21 percent, nearly matching the rate for all workers during the 1930s Great Depression.

U.S. households with income of more than $150,000 a year have an unemployment rate of 3.2 percent, a level traditionally defined as full employment. At the same time, middle-income workers are increasingly pushed into lower-wage jobs. Many of them in turn are displacing lower-skilled, low-income workers, who become unemployed or are forced to work fewer hours, the analysis shows.

"This was no 'equal opportunity' recession or an 'equal opportunity' recovery," said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University. "One part of America is in depression, while another part is in full employment."

The findings follow the government's tepid jobs report this month that showed a steep decline in the share of Americans working or looking for work. On Monday, President Barack Obama stressed the need to address widening inequality after decades of a "winner-take-all economy, where a few do better and better and better, while everybody else just treads water or loses ground."

"We have to make the investments necessary to attract good jobs that pay good wages and offer high standards of living," he said.

While the link between income and joblessness may seem apparent, the data are the first to establish how this factor has contributed to the erosion of the middle class, a traditional strength of the U.S. economy.

Based on employment-to-population ratios, which are seen as a reliable gauge of the labor market, the employment disparity between rich and poor households remains at the highest levels in more than a decade, the period for which comparable data are available.

"It's pretty frustrating," says Annette Guerra, 33, of San Antonio, who has been looking for a full-time job since she finished nursing school more than a year ago. During her search, she found that employers had become increasingly picky about an applicant's qualifications in the tight job market, often turning her away because she lacked previous nursing experience or because she wasn't certified in more areas.

Guerra says she now gets by doing "odds and ends" jobs such as a pastry chef, bringing in $500 to $1,000 a month, but she says daily living can be challenging as she cares for her mother, who has end-stage kidney disease.

"For those trying to get ahead, there should be some help from government or companies to boost the economy and provide people with the necessary job training," says Guerra, who hasn't ruled out returning to college to get a business degree once her financial situation is more stable. "I'm optimistic that things will start to look up, but it's hard."

Last year the average length of unemployment for U.S. workers reached 39.5 weeks, the highest level since World War II. The duration of unemployment has since edged lower to 36.5 weeks based on data from January to July, still relatively high historically.

Economists call this a "bumping down" or "crowding out" in the labor market, a domino effect that pushes out lower-income workers, pushes median income downward and contributes to income inequality. Because many mid-skill jobs are being lost to globalization and automation, recent U.S. growth in low-wage jobs has not come fast enough to absorb displaced workers at the bottom.

Low-wage workers are now older and better educated than ever, with especially large jumps in those with at least some college-level training.

"The people at the bottom are going to be continually squeezed, and I don't see this ending anytime soon," said Harvard economist Richard Freeman. "If the economy were growing enough or unions were stronger, it would be possible for the less educated to do better and for the lower income to improve. But in our current world, where we are still adjusting to globalization, that is not very likely to happen."

The figures are based on an analysis of the Census Bureau's Current Population Survey by Sum and Northeastern University economist Ishwar Khatiwada. They are supplemented with material from the Massachusetts Institute of Technology's David Autor, an economics professor known for his research on the disappearance of mid-skill positions, as well as John Schmitt, a senior economist at the Center for Economic and Policy Research, a Washington think tank. Mark Rank, a professor at Washington University in St. Louis, analyzed data on poverty.

The overall rise in both the unemployment rate and low-wage jobs due to the recent recession accounts for the record number of people who were stuck in poverty in 2011: 46.2 million, or 15 percent of the population. When the Census Bureau releases new 2012 poverty figures on Tuesday, most experts believe the numbers will show only slight improvement, if any, due to the slow pace of the recovery.

Overall, more than 16 percent of adults ages 16 and older are now "underutilized" in the labor market — that is, they are unemployed, "underemployed" in part-time jobs when full-time work is desired or among the "hidden unemployed" who are not actively job hunting but express a desire for immediate work.

Among households making less than $20,000 a year, the share of underutilized workers jumps to about 40 percent. For those in the $20,000-to-$39,999 category, it's just over 21 percent and about 15 percent for those earning $40,000 to $59,999. At the top of the scale, underutilization affects just 7.2 percent of those in households earning more than $150,000.

By race and ethnicity, black workers in households earning less than $20,000 were the most likely to be underutilized, at 48.4 percent. Low-income Hispanics and whites were almost equally as likely to be underutilized, at 38 percent and 36.8 percent, respectively, compared to 31.8 percent for low-income Asian-Americans.

Loss of jobs in the recent recession has hit younger, less-educated workers especially hard. Fewer teenagers are taking on low-wage jobs as older adults pushed out of disappearing mid-skill jobs, such as bank teller or administrative assistant, move down the ladder.

Recent analysis by the Associated Press-NORC Center for Public Affairs Research shows that whites and older workers are more pessimistic about their opportunities to advance compared to other groups in the lower-wage workforce.

Eric Reichert, 45, of West Milford, N.J. Reichert, who holds a master's degree in library science, is among the longer-term job seekers. He had hoped to find work as a legal librarian or in a similar research position after he was laid off from a title insurance company in 2008. Reichert now works in a lower-wage administrative records position, also helping to care for his 8-year-old son while his wife works full-time at a pharmaceutical company.

"I'm still looking, and I wish I could say that I will find a better job, but I can no longer say that with confidence," he said. "At this point, I'm reconsidering what I'm going do, but it's not like I'm 24 years old anymore."

 

Comments

nonconformist

Spoken like a true pompous d*uche bag.

nonconformist

And, news flash, there are just as many "bad employers" as there are "bad employees" these days.

Nemesis

Then go work for the good ones.

arnmcrmn

quit complaining noncomformist. If you don't like your choices, its up to you to change your life. No me or anyone else.

nonconformist

No one is asking you to. I'm on here, free as everyone else, to state my opinion. Don't like it? P*ss off.

grumpy

"It's not about the rich "sharing" anything. It's about paying dedicated employees what they are worth."

Who is the one who decides what a particular worker is worth? The supervisor? The owner? The worker?

I had a sports car I poured money and time into so I could run Time Trials when I was younger. When I sold it I had nearly $30,000 just in parts I added to the car, on top of what I bought the car for (21,000), and what I paid tuners to tune the computers that control the engine. It was in great condition when I sold it. I got $24,000 for it with what spare parts I had. To me it was worth near $40,000. The people who would buy it didn't agree. In the end it was worth what someone was willing to pay. I "might" have gotten more if I parted it out, but not enough to do it, it is much more fun to build it than to strip it, package it, send the parts out, and hope everything goes well.

Same with workers. I worked for many companies in a union construction trade. I was paid over scale because I negotiated a bonus before I started working for them. They did that because they thought I was worth the bonus. They could have gotten someone else out of the union hall if they wanted, there usually were guys they passed over to hire me and knew what I could do, they were willing pay more for me. I kept up with the "state of the art" in what I did, kept my certificates current, did continuing education in the Winter to keep up with new innovations, and went beyond just keeping up. A worker is "worth" what an employer is willing to pay them for the work they will be doing.

deertracker

Tell us all about your business sprinkles! If you value your employees the cost to maintain a good staff will be lower by the way. Everyone does not or can't own their business. That in no way makes them inferior to those that can or do. Say what you want but any business that has any chance at all of survival needs good employees and good management. Your statement about people on welfare is complete BS and you know it. If what you say is true those same well paid people on welfare and receiving gov't assistance support your business. Do you take their money?

donutshopguy

deer,

"Everyone does not or can't own their business." So they shouldn't expect the same compensation, correct?

Are we back on that mystic "living wage" kick? Don't see a lot of Americans dying from a low wage. So are the wages "living" ?

You don't travel much out of Erie County. The poor in this country are 100 times more well off than the world. You really need to see how the rest of the world lives. You would be ashamed of your "living wage" whining.

deertracker

They should expect to be paid a fair wage. What is so wrong with that? You act as though the only people benefiting are the employees. You can't really believe that. YOU need to see how the rest of the world lives. Are you ashamed of your wages? Try answering my question!

nonconformist

Agreed! Happier employees equals less sick time, more efficiency, better customer service, shall I go on?

arnmcrmn

not true at all nonconformist. you simply have no clue.

donutshopguy

deer,

What is you impression of a fair wage? Who decides what is fair?

I'm not ashamed of the money I've made over my lifetime. I'm not ashamed of the menial jobs I worked to reach this point. I'm not ashamed of receiving no pay , while my employees were paid in the early years to build my company. I'm not ashamed of the pay and benefits I paid my workers today. I'm not ashamed that some employees left me to further their careers. I'm not ashamed of the employees I let go who didn't believe they had to work.

Did I answer your questions.

deertracker

No, as usual. You know which question I was referring to. Nice try wrong guy! Don't whine about not getting paid. I am sure you eventually got paid and it's the cost of doing business!

LadyC

Nowhere did I mention a socialistic society or did I become an advocate of government entitlement. I am not asking the rich to "share their spoils" or pay my way through life. By the way, I receive no assistance (yet) and own my home. I am not just starting out and wanting it all. I am, however, tired of the attitudes toward the working class, and tired of people's condescending attitudes towards paying for someone's time, energy, and labor. If you hire a plumber, you pay him. If you hire an electrician, you pay him. Or you do it yourself. Many places will charge an arm and a leg for a product and the employees will be the ones on the front line, listening to the complaints, taking the blame if a customer isn't happy, and working the Black Fridays, Sundays, and holidays. And they aren't getting any more for it. And at least half the food stamp recipients are in the category of "working poor." These minimum-paying places are being supplemented in a sense, by the government making up for the living wage THEY will not pay. There is just as much waste going on in the upper levels of a corporation, too. Vacations disguised as conventions, company car, plane, etc. I don't have any animosity towards the rich, as long as they aren't stepping on me and mine to get there.

donutshopguy

Deer,

Thanks for the name "Sprinkles". I try to sprinkle my wisdom with high school kids in the area. Excuses such as race, upbringing and entitlement are not excepted. Personal responsibility, hard work, education and sacrifice are commended.

Not all believe in my philosophy. But, I do reach some that haven't been dealt the same set of cards. It is very uplifting when a young woman or man will not be held down by excuses.

It keeps me continuing my ideals of personal responsibility.

What are you doing to make the world a better place?

The Big Dog's back

Why don't you right wing business owners share the name of your companies? Are you afraid people won't buy your products once they find out how you really think? If you are so sure you're right share the name.

donutshopguy

Dog,

I'll share the name of my company. Are you willing to share with us your name?

arnmcrmn

big dogs company......= US TAX PAYER in the form of welfare.

deertracker

Good question Dog! They don't want their employees to know that the boss does not think they are worth the paper their paychecks are printed on. That's assuming they don't pay under the table yet still deduct taxes like that Greek guy does!

The Big Dog's back

Exactly.

nonconformist

Cha-Ching! Pun intended.

kURTje

"Only the little people pay taxes." Leona Helmsly. Much truth in her statement.

Nemesis

And where did she end up? Oh yeah, in prison for not paying her taxes. Hmmmmmm

arnmcrmn

Funny kurt because the top 10% of earners pay 95% of the federal tax dollars collected each and every year. Facts...try them out for once.

kURTje

Facts..pay those subsidies (muck) & Jerry Stackhouse. He sure stunk up Willard with Metro. Now go play ball.

arnmcrmn

Stackhouse was one of Huron County's biggest tax payers. I wont comment on the metro part. Again facts.

kURTje

Thank You! That piece of work garnered MUCH of OUR tax $$. Another alien that came to my area & not honoring our customs. Glad he is doing time. He should have paid; it was our money. We both know which party he loved & voted for. Ddrrrrrrrr

donutshopguy

Dog & Deer,

So based on your comments you are against me helping young people improve themselves. I "sprinkle" personal responsibility and further education as a means to a better life. I show them local real life examples of success stories.

What are you both doing to improve the next generations? Preaching success is bad and the government will take care of you?

God help us.

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