Look at the Jobless Rate for the New Joads

Naked Capitalism shines some light on an aspect of the long, sad unemployment story that we don’t hear nearly enough about: the very uneven way in which unemployment hits people, depending on their income level.

The starting point for this one is a recent study by Northeastern University’s Center for Labor Market Studies, looking at labor conditions facing U.S households during the last quarter of 2009. The subhead says it all:

A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent

As we’ve said before, it can be hard for the business press to find creative new ways to tell the unemployment story. But, as this study makes clear, that doesn’t mean it’s time to stop trying. Not with a situation like this:

Workers in the lowest income decile faced a Great Depression type unemployment rate of nearly 31% while those in the second lowest income decile had an unemployment rate slightly below 20% … Unemployment rates fell steadily and steeply across the ten income deciles. Workers in the top two deciles of the income distribution faced unemployment rates of only 4.0 and 3.2 percent respectively, the equivalent of full employment. The relative size of the gap in unemployment rates between workers in the bottom and top income deciles was close to ten to one. Clearly, these two groups of workers occupy radically different types of labor markets in the U.S.

See what I mean? This report has been around since February, but it only got a little bit of attention. I’m blaming “Snowmaggedon.”

As Naked Cap’s guest blogger, Washington’s blog, points out, a few people did notice. Boeing CEO Jim McNerney mentioned the report in a speech at the Kellogg School of Management—after describing the wonders of the 787 Dreamliner—to help make the pitch for improved education in science, technology, engineering and math.

So did Arianna Huffington, the Queen of All Many Media, who “pointed out that it if were the high-earners suffering 31 percent unemployment, the media would be discussing unemployment non-stop. But because it is the poor who are suffering Depression-level unemployment, they largely ignore it.”

I’ve got plenty of disagreements with Huffington, but I think it’s hard to dispute her on that.

As The Audit’s own Ryan Chittum pointed out so powerfully a while back, very few, if any, business reporters at major media outlets have personally been through the kinds of truly hard times they’re trying to write about. (Ryan has. Read about it here.)

Bob Herbert called his column based on the report “The Worst of the Pain,” and made his point pretty sharply:

There is a great tendency in this country to refuse to see what is right in front of everybody’s eyes.

Herbert used words like “catastrophic” and “devastating,” and spelled out what he’s worried about:

The point here is that those in the lower-income groups are in a much, much deeper hole than the general commentary on the recession would lead people to believe. And none of the policy prescriptions being offered by the administration or the leaders of either party in Congress would in any way substantially alleviate the plight of those groups.

We talk about the recession as if all of its victims were suffering equally, and all will be helped by some bland, class-and-category-neutral solution.

That is so wrong. As the Center for Labor Market Studies explained in its report: “A true labor market depression faced those in the bottom two deciles 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.”

Some weekend commenters at Naked Capitalism wondered if the study was missing the fact that higher earners who lose their jobs might fall into lower income brackets, and boost the numbers there.

Time’s Curious Capitalist wondered the same thing, and emailed one of the study’s authors to find out. And there might be something to that critique. As the author explained:

The paper is based on family income including all other members of family and includes theoretically all cash transfers including unemployment insurance. It is true that a person who had a job a year ago and lost it and has no [unemployment insurance] coverage or other income can get pushed down to a much lower income but they are an overwhelming exception.

But, as The Curious Capitalist points out, “he said something else interesting:”

We ran this model before the recession started and results show overwhelmingly that low income workers were far more adversely affected. There are few job losses at top.

That’s not good. And it’s not too late to write about.

The gang at Northeastern has a more recent report that looks at the way age, race, gender, education and other factors impact unemployment—and underemployment—levels.

For the short version, check out this groovy interactive graph the Times posted late last year that lets you select age, race, gender and education and see that chances that someone is standing on the unemployment line. It’s pretty amazing to watch that line dance around, depending on what you choose.

There’s just one problem. The Times called the chart “The Jobless Rate for People Like You.” As this Northeastern research makes clear, the business press needs to look at the jobless rate for the new Joads. Sure looks like there are a lot more stories there.

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Holly Yeager is CJR's Peterson Fellow, covering fiscal and economic policy. She is based in Washington and reachable at holly.yeager@gmail.com.