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Employment gap between rich, poor widest on record

By The Associated Press
Monday, Sept. 16, 2013, 6:36 p.m.
 

WASHINGTON — 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.

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.

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 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.”

The data are the first to establish how that factor has contributed to the erosion of the middle class, a traditional strength of the economy.

Based on employment-to-population ratios, regarded 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 nursing experience or because she wasn't certified in more areas.

Guerra says she 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.

Last year, the average length of unemployment for 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.

“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.

Overall, more than 16 percent of people 16 and older are “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.

 

 
 


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