Topic: Economic Policy
Real, Uglier American Unemployment
Economic inequality is shown by much higher unemployment rates with lower income households. The political use of a national unemployment rate is political propaganda designed to hide the real problem that is intractable.by Joel S. Hirschhorn
(libertarian)
Wednesday, February 17, 2010
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 bottomof 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 that 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). Also consider that last November nearly 20 percent of all men between 25 and 54 did not have jobs, the highest figure since the labor bureau began counting in 1948.
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. The US would have to produce 10 million new jobs just to get back to the unemployment levels of 2007 - impossible for many years. So, politicians will keep making things look better by citing the national average.
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Closer to truth than any reporting I\'ve come across. And, today the administration is out there touting that, thru the stimulus package they have defeated depression, can\'t happen. Yet, absolutely nothing has changed since 2008. True, the Fed has spent a lot of taxpayer/borrowed money and folks are way worse off than they were but the toxic assets are still there, Fan/Fred still broke, the worst of residential defaults are ahead of us, commercial realestate defaults is now on the front burner and, as your article clearly states, the jobless rate is astronomical.
Clearly, a failed government. Yet, neither the government nor the duopoly wants to take responsibility for that. Bayh is quitting on moral grounds. Woweee! More likely he is quitting to take Tauzin\'s position with big Pharma.
Enough tautology. Solutions should be the focus. Who will save us? The TEA party? As of yet no platform, no rules to play by. IMO, a 3rd party is our only solution but not just any 3rd party. Must be founded in rules to prevent the party from every being co-opted by special interest and the money influence. How? BY having party members serve as oversight for elected/appointed officials, revoking their party membership by popular party vote if they screw up. Present a pure reform agenda with no social issues. First on the agenda is campaign finance reform. Makes no sense to try to reform anything until we have carried out cam. fin. reform.
The Republic Sentry Party represents a party with a different political attitude, designed for the 21st century.
We do have options. One is to vote out incumbents such as Charlie Rangel, 34 years in tenure. See Tenure Corrupts.com and VOIDnow.com. And, please visit www.republicsentry.com and leave a comment. Check it out.
I find this article quite intertesting. As usually Joel is right on the point. As usual I ask; "Joel what are you willing to do to rectify the situation?"
Surely you must some ideas that go beyond moaning and crying woe is us!
Posted By: Joel S. Hirschhorn
Date: 2010-02-17 15:07:20
Khary: Although we need a competitive third party, that will not happen until the political system is reformed and that will only happen through bold constitutional amendments that will only be proposed through an Article V convention (not from a corrupt Congress). I see nothing, otherwise, but a continued demise of the USA as it turns into a second rate nation. History tells us that world powers come and go. The USA is going to hell; our government is broken; our two-party plutocracy is worse than useless, it is criminally incompetent.
Posted By: Richard Backus
Date: 2010-02-18 02:45:14
Another excellent and very timely article, Joel. I believe the low unemployment rate for over $100,000 "earners" is that almost all these jobs are sinecures and patronage jobs in which it is understood that they will do no work. This is the mysterious "middle class" that all the pols were anxious to exclude from tax increases. In the present crises, people of this "caliber" perhaps can double their productivity. But twice nothing is still nothing.
Thanks tor the info. Being a net addict I'm suprised I've not seen this breakdown before. I imagine that undocumented workers have influenced the low end stats. What seems strange to me is the huge jump in unemployment from the top to the level just below.
Boo freaking hoo......I bust my butt to stay out of the lower 50 and I am not ashamed of my success. Most people I see in America's projects are fat and smoking cigs so ??????????
Posted By: Delmar Jackson
Date: 2010-02-24 05:57:22
If E Verify was made mandatory we could open up millions of jobs currently taken by illegal aliens. If we ended most of the fraudulent worker visa programs we could stop bringing in over 165,000 foreigners on worker visas that come in EACH MONTH in the midst of the worst unemployment since the Great depession.
Income Disparity has risen dramatically since the floodgates of immigration wrer opened in 1965 when the immigration law was changed. How about a immigration moratorium until the unemployment goes back down to 6 percent.
Lets gface it, the only people that favor massive unending immigration benefit from it. immigration is a tax on the working poor and workewr visa fraud is helping to wipe out the middle class.
I have no problem believing that unemployment is worse than reported, but the methodology seems problematic. Seems like they are using 2008 deciles to classify 2009 income and unemployment. So really this just says those that are unemployed have a lower income. Big surprise?
And even though the wealthier folks may not have as high an unemployment rate, the government's attacks on business cause them to pull in their horns and the job market for the lower income gets squeezed. Joel's point that our nation is falling is not to be taken lightly. There is not enough time to create an effective third party. It would take a couple of election cycles to actually grown strong enough to win nationally. We face the overthrow of our free republic into an abyss far worse than socialism. If you're a God-fearing person you need to pray. If you're not, you better become one. This is the greatest crisis our nation has ever faced.
Much better than the BS from the MSM, but there is another reason people at the top of the earnings pyramid are less affected. Generally, they work harder. As a business owner who are you going to lay off? The slacker or the top producer? Additionally when a top earner is laid off, they are much quicker to go looking for a job and willing or able to take a pay cut to get working again. Also, at the low end of things unemployment benefits are much closer to a normal paycheck so people sit back and take a vacation so to speak. I have seen it among my friends who got laid off in Q4 '08 and are still out of work.
We have to stop the class warfare BS. We are the land of opporunity. ANY BODY can make it to the top. Look at Bill Gates?
I also agree with Dave. It is too late to form a third party and fix it thru elections, if they could even do it. There are to many federal bureacracies in place now. I truly believe the world is about to enter a second Dark Age. And yes, before you say it, my family and friends all call me the Mayor of Crazytown.
I would agree that illegal immigration and a lazy lower class that will not do the manual labor that is the only thing they are qualified to do is part of the problem. But consider this.
Government jobs are the only jobs that are being saved or created by the stimulus. The average government salary is $71,000 dollars. The average private salary is only $41,000. This explains why the numbers are so skewed the way that they are. The government is only saving and growing higher paid government jobs. There are no $12,500 government jobs and you would be hard pressed to find any government jobs in the lower 3 categories. Big controlling government is the problem.
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