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

phroggy

The bosses fail to realize that their employees make them very rich.

Unassumer

Yup and if it weren't for these employees, which they do not appreciate or pay a decent wage, there would be no business to make them rich. It's time employers valued their employees instead of just use them.

8ballinthesidepocket

Wah wah wah!! Quit whininig and start your own business, cant wait to hear you whine and snivle about why you cant do that either. Could it be your lack of education? Dont have any marketable skills? No unique product ideas? Quit complaining and go do something that adds some value, people will flock to your business. Easy, right?

nonconformist

I think this just goes to show everything I was trying to point out in Haag's last article. Nursing and library science are far from "useless" degrees, yet, why can't these folks find a decent paying job in their respective fields? And like the one gentleman said, not everyone can turn around and go BACK to college to enter a different field. And why should we? It really is a sad, sad state of affairs. I hope things turn around sooner rather than later for everyone.

Nemesis

And, as I pointed out in that other thread, the law of supply and demand won't be denied. So now we finally get an idea of what you consider a marketable degree. Library Science has been a dying field for at least 15 years - CWRU actually closed their school of Library Science, considered the best in the nation - the content has been absorbed into more technical information science fields. As for nursing, there's nursing, and then there's nursing. One can get an RN license now with an Associates Degree, which won't stack up very well against someone with a BSN. Also, read the article - the person in question is lacking in experience and specialty certifications, i.e she lacks the credentials the market is seeking. Those who HAVE those credentials are in demand.

Even in high tech, demand changes. During a war, hot OR cold, aerospace engineers have it made, not so much when the world is at peace. Those who adapt, do well.

nonconformist

Nemesis, as I pointed out in the other thread, people keep pushing college education down our throats and take our hard earned money, yet so many people can't find work. So who's fault is that? Hmm, let's see... do we begin with the marketers who work for the colleges? Do we blame the colleges for feeding us all the BS? Who is going to take some responsibility here? You have millions of people trying to better their lives, trying to do the right thing, only to find out it's not. And sorry, if I put my way through school and had a masters of ANYTHING, nope I shouldn't be expected to go through all of that again. Come on man, let's at least be a little realistic.

Simple Enough II

Hmmm wish folks would do some research on their own instead of "riding the wave" for what to do, be it work, buying a house etc, or going to college on loans. If you don't have the skill sets or experiance that the labor market requires, who is to blame? And if you think you are under appreciated, under payed then go elsewhere, you do have that option.

Nemesis

Who's at fault? Simple - who made the choice? If you can't comprehend the law of supply and demand, and you lack the wherewithal to make a sound choice of major, maybe you don't belong in college. If college freshmen are generally too immature, ignorant and inexperienced to make such decisions on their own, why do we let them vote?

Simple Enough II

Because we say they are adults and we also can conscript them into the service and send them off to war, sue them in a court of law, hold them legally responsible for their actions and tax them. Where are the parents in all this trying to prepare little Johnnie or Suzie for life after leaving school. One thing that is not being noted is that many students are not prepared for college the can not pass the entry exams, that in itself is troubling.

KnuckleDragger

What the article doesn't say is that most of those in the $150K + level are professionals with advanced degrees. Which proves what has been said all along, education is the single most important thing to fighting unemployment and a low income. If you are without, or only have a high school diploma with no specialized training, you are going to be left behind. It seems odd that they just took the word of one nursing school graduate and went with it. It quick search will reveal thousands of nursing jobs in Texas alone. The problem is that many nurses hope to start out immediately in a high paying hospital job rather than get some experience elsewhere. If you are a nurse and can't find a job right now, there must be some other blemish on your employment history that you didn't tell the reporter.

From the Grave

The world needs ditch diggers too. Why shouldn't they get a decent wage? Maybe if they'd get a ditch digging masters degree...

KnuckleDragger

Of course we need ditch diggers, however what you are suggesting is that we pay someone that is a high school dropout a six figure income to do it. It ain't never gonna happen!!! If you aren't satisfied with your lot in life, guess what? You are the only one that can change it. People need to quit expecting everyone else to be responsible for their happiness.

From the Grave

Who ever said a ditch digger was a high school drop out? You assumed that, and you also assumed that digging a ditch properly and safely doesn't require a skill that is worth a decent wage, one that you can live on. You are displaying an incredible level of arrogance, which is the REAL problem here.

Centauri

Keep voting in the rich ruling class to office and get more of the same. The corporate owned news media picks the rich ruling class candidates for you while ignoring the best candidates for the people. Get a clue people!

KnuckleDragger

Tell that to the libby's who keep voting in uber-rich dems and then claiming that these people are there to help them. They keep throwing their constituents a few crumbs while they laugh all the way to the bank.

rottnrog

Or tell it to the repubs who want to keep lowering taxes on the rich and raise them on the rest of us !!!

KnuckleDragger

Let's see, I'm not rich but the last several times taxes were lowered, mine went down. If you mean that we should tell repubs to redistribute more income from the middle class and rich to the non-producers in society, uhhh I think not. The poor don't pay taxes, I don't want to see another penny of my money going to someone who refuses to work. Oh, and by the way, most of those so-called rich people probably paid more in taxes last year than you make.

LadyC

And many companies have you apply online, or through Snag A Job, etc. It seems like a lot of them have almost a continuously running application, all the time, to keep people applying and to have more leverage with their employees. They don't tell you hours, rates of pay, or anything. While we, the underemployed are shopping for jobs, they the greedy, are shopping for those who will work cheaper and replace the people they already have. Way too many games.

KnuckleDragger

I get where you are coming from, but if you have no income coming in, why would you picky about the hours you work? Get your foot in the door, prove yourself, and then negotiate with your employer for better hours. While some employers may not be very sympathetic, I have found that many are reasonable.

LadyC

Some of us have to supplement our incomes with second or third jobs. And many of us have seasonal employment, which tapers off. Job juggling is becoming a necessity, and many of us just don't have time for games. Yes, I will do this job for such and such an hour, on these days, no problem! But please stop with the bait and switch.

donutshopguy

I have noticed a trend in the fairly new graduated and new graduates. They expect to be given the leadership role without any experience. It's not how it works in pretty much any business or organization. A lot of kids won't take entry level jobs. It's beneath them. They want to make what their parents make now without putting in the 20 years of work.

The New World Czar

Those who are "A and B" employees will do fine in this job market. What it is doing is weeding out the "C" and below grade.

Simply put, you have to be worthy and appreciative of your employer hiring and keeping you on the payroll.

donutshopguy

phroggy,

If someone thinks they can do better than their employer than start your own company and prove it. No one is holding anyone back from doing better. It's the American way.

Make yourself rich through hard work and hand the money over to your employees. No one is stopping you from taking that path.

grandmasgirl

I think you should be paid according to your worth. However, if there were not the little "peon" workers, no one would be working. If there were not the auto manufacturing jobs, everyone would be walking, if there were not the farmers, no one would be eating. If there were not the doctors and nurses, a lot would be dying. Come on people, not everyone wants a job that needs a college degree. Some just want to go to work, come home and pay the bills. However, since the busting of most unions, employers have found out that they can pay the little man next to nothing while they get richer and richer.

LadyC

Absolutely true! And they would rather pay people to figure out how much they will save by doing this, than pay a little more to start with and have people who remain loyal to them or move up within the company. Whenever costs are cut, it is always from the ones doing the real work. Even college degrees are no guarantee anymore, no matter what kind they are. The are another debt to add to the pile of bills.

donutshopguy

grandmasgirl,

So what is your solution? A $15 dollar an hour minimum wage? Who will pay for that increase ? The end consumer?

Or, how about those who work hard and took the chance to build their own company just give the money away to employees? You do it first and see if anyone follows.

So what is wrong with trying to be richer? Some of us little men have sacrificed early in life to achieve the level we presently hold. Jealous? Lazy?

KnuckleDragger

They are already doing it. That is about what welfare pays out by the time you figure in all the freebies. There is no changing these idiots minds, their jealousy precludes rational thinking.

rottnrog

As billionaire Warren Buffet said "There is something wrong when I pay less in taxes than my secretary" !!

Nemesis

Except that when he said that, his lawyers were fighting to keep him from having to pay his taxes from the previous few years.

grandmasgirl

donutshopguy: I never said that I expected the owner to go bankrupt and live in a shack. Appearently you do not understand a "common" man's logic. I expect to be paid a decent wage for the work I do. Is it fair that the owner pays someone $11.00 an hour to make a product that the owner clears $100 on? I don't know how to get it through your head that if YOU (the employer) treats me (an employee) fair, I will go over and above your expectations of what a loyal employee is. Of course I expect you to reply with the same nonsense that you usually do.

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