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Unemployment for Those Who Earn $150,000 or More is Only 3%, While Unemployment for the Poor is 31%
Boeing CEO Jim McNerney succinctly summarized
a recent study by Northeastern University's Center for Labor Market
Studies regarding unemployment rates for different income brackets:
The
Center analyzed the labor conditions faced by income-grouped U.S.
households during the fourth quarter of 2009.
In the face of
one of the worst economic environments in memory, those in the highest
income groups had nearly full employment levels, with just a 3.2
percent unemployment rate for households with over $150,000 in income
and a 4 percent rate in the next-highest income group of $100,000-plus.
The two lowest-income groups -- under $12,500
and under $20,000 annually -- faced unemployment rates of 30.8 percent
and 19.1 percent, respectively.
The study - published in February - notes that the poor are suffering Depression levels of unemployment:
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.
The study is subtitled "A Truly Great Depression Among the Nation’s Low
Income Workers Amidst Full Employment Among the Most Affluent".
Arianna Huffington, commenting on the study, 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.
As I noted last August:
Chris Tilly - director of the Institute for Research on Labor and
Employment at UCLA - points out that some populations, such as
African-Americans and high school dropouts, have been hit much harder
than other populations, and that these groups are already experiencing
depression-level unemployment.
For background on unemployment, see this and this.
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The question of job fitness is an important one here, but so is the question of willingness to relocate for that job. I'm actually now in the 80-90 decile in terms of salary this year, but that was only because I was willing to move my entire family cross country from the Pacific Northwest to Washington, DC, in order to take a technical consulting job that paid reasonably well. Last year, my net income was below the poverty line, after the consultancy that I worked with shed most of their consultants.
I'd argue that by and large IT people in particular are most likely to be heading back to something approaching full employment, but that's because they are probably as a group far more likely to be mobile - or are able to work remotely across the Internet better than people in service jobs or manufacturing. They also as a group have specialized skills that are not readily duplicatible; I specialize in fairly esoteric large scale content management systems, and know most of the other practitioners in the field personally.
Another trend that I think comes into play is that even management is being forced to become more technically specialized, and this also means that you end up with the higher paying jobs being open only to a very small subset of the overall population; but its only the ones that are willing to be mobile that are benefiting from the trend.
Anecdotally what I'm hearing in the IT industry is that hiring is now picking up, and that there are even spot shortages of certain skills. However, that's little comfort if you're a marketing manager for a life insurance company, or worse if you're a day laborer doing construction work, retail, or driving a rig, especially if you're not in your late teens or early twenties and hence cheap by definition.
We've entered an engineering economy, where technical knowledge and a willingness to relocate to where the needs are for consulting are the rules of the game.
This is one reason why I rent. Not that it fucking matters, since I'm still going to have to pay for others' housing mistakes, but it does give me the kind of mobility that is necessary in this economy.
How is there any unemployment at all for people earning more that $150,000? Seems to me that you have to be employed to earn anything. Who are these 3% that are both unemployed and earning $150,000? And of course, there is more unemployment among the poor than the rich as unemployment is what causes people to be poor. This is essentially a tautology not a revealing bit of analysis. And get back to me when you find out who the unemployed 3% are that are pulling down $150,000.
cmon scofflaw, dont be a smart ass ! very good point tho! I think the debate in the article rather misses the point. There are two deep order globalisation effects, both related to the mass exodus of jobs to overseas markets. Clinton pushed through NAFTA and abandoned health as a reform issue. A corrolary of NAFTA was a general global principle that going where labour laws were lax and labour was cheaper circumvented labour laws in the US and we can see how the dems under Obama are going to introduce price fixing within Health. The issue of unemployment is a measure of the success of past economic policies. Surely you agree that the country would be in great shape if unemployment amongst the poor was closer to 10% tham 30%. It would be a leap to say that those people in that demographic are there because of globalisation, but it is fact that cheap overseas labour has seen this number balloon over the last two decades.
The second order effect is that the ability of those unemployed or in low wages to migrate upwards is severely impaired if they can't afford an education to escape or cant participate in developing product and intellectual capital. Anyway, your point is a good one and made me chuckle so thanks!
I agree with BS Inc as far as automation and productivity. Many domestic jobs have been lost to technological improvements.
In addition, wage arbitrage has offshored much of our low-educated labor.
Now high-bandwith and robust internet communication is offshoring much of our high-educated back-office labor (lawyers and accountants, for example)
Govt intervention in the FIRE sector is a separate but related issue. Separate because the acute problem was due to macro-economic issues of interest rates and a lack of regulation and enforcement. But the chronic problem is due to the offshoring of components of the FIRE economy.
The govt has to maintain wages in order to maintian tax revenue. Perhaps there is a low multiplier of wage stimulus to revenue generation, but this seems to me to be a lifeboat strategy until land is sighted.
Our deficit funding from our trade adversaries seems tobe a confounding factor in the situation.
This from the jerk thats moving 787 jobs to south carolina !!!!!!!!!!!! maybe america needs ceo`s from china that will work for less !!!!!!!!!!!!!!!!!!!!!!!!!
I find this all questionable. After all, much of the financial services industry (including myself) were wiped out. This recession began in the professional class. I know in my city, there are lots of professionals out of work.
One reason may be the methodology. They measured late 2009 unemployment compared to 2008 income deciles. So if you were a highly paid worker in 2007, and not working in 2008, you would appear to be in the lowest decile.
That's true in my case. I have not worked since early 2008, so would appear to be in the lowest decile. If it were compared to 2007, I would have been in the highest.
With many professionals in long-term unemployment situation, this could be very misleading.
I'm pretty sure the data source they are using has the unemployed person's most recent income data. So, even if your last job was in 2008 and the study was done in 2009, if you listed $150K as your most recent income, that's where the study compilers put you.
Come on, no one would be so stupid as to do otherwise in a study of this nature.
read the title. if I am making 150K I'm likely not unemployed. if I make very little a year there is currentlyt a good chance I am unemployed. i.e. if you were a banker and are unemployed you aren't making 150K.
if I make 12.5K, maybe I made that in 6 months of employment so have 50% chance of being unemployed.
the more you make a year the more likely you are to be employed. unemployed work less and make less because of it.
This, in my opinion, is just more Huff/Gov propaganda to continue the wealth transfer from America’s middle class to the elites. It’s not the poor they’re transferring it to, it’s to the people who handle the poor--the union bosses, the foundations, the political action leaders, high level government employees dependent on social welfare largesse, the university hierarchies, the health care moguls, the government-connected social and human service agencies from the NAACP to La Raza to Planned Parenthood to societies and welfare support groups of all sizes, to the urban development crowd, to the Wall Street stimulus dependent… and to the people who design studies such as these in order to get funding.
In other words, the money windfall in the wealth transfer scheme heads for the poor, but it is short circuited by the financial ambulance chasers that follow the poor.
Nor do I believe the figures in these “studies.” I know numerous self-employed engineers and consultants who’re dead in the water; I know of entire company departments of engineers and related research staff that have been eliminated, I personally know many men in their forties who have left their $150,000 jobs in coastal California to head back to the Midwest for less pay but where they can afford a home for their families…. I know of corporations that have let go entire levels of middle management, closing plants and divisions… I know axed CEOs...
This study just doesn’t ring true. The purpose of these studies is to support indirect wealth transfer to the banks via people who are not going to pay their mortgages while living cheaply in houses they couldn’t afford which they moved into with no down payment during Hank Paulson's halcyon mortgage-fraud days, to public service employees, and to the Lloyd Blankfein and Jamie Dimon class. Studies such as these are used by the government to heavily weight its programs for corporate-labor minorities to subsidize income and health care while supporting tax increases for middle class producers and small businessmen who allegedly are not suffering and need to share in this banker-government-made crisis.
They go like homing pigeons to where the money is. It’s not with the working poor; it’s not with the tax-evading Goldmans: the money is with America’s middle class—the engineers burning the midnight oil; the small entrepreneurs working seven days a week, the professionals dedicating their lives to research and development. If it’s necessary to call them “rich” by summing their $150,000 - $250,000 incomes in with Blankfein’s 2007 compensation of $53,965,418 in 2007 to put them in the "top 1%," so be it.
Your anecdotes are the 1st derivative of the pain being felt in the lowest quintile...they are unemployed because of the lack of ag demand represented by those in that 31% UE bracket who have been looking for a job with no skills for more than a year and a half since Wal-Mart gave them a pink slip.
The employment of the unskilled is the most flexible and rolls up faster and harder when the shit hits the fan.
http://www.youtube.com/watch?v=OIlIL5pPFmY
If you read the study, that's not the point at all.
+1
I think one of the major issues driving this discrepancy is that computing power and automation have advanced to the point where machines are smarter than many of the people at the bottom rungs of the employment ladder. Couple that fact with the increasing cost of health care (or, even if the employer isn't bearing that cost directly through health insurance, the cost of health conditions on absenteeism and productivity at the low end), makes replacing labor with capital almost a no-brainer at the low end.
At the high end, people can criticize all they want, but the fact remains that people in those jobs work with abstractions and concepts which are difficult to replicate via software and automation. So long as that remains true, those people can't be pushed out of a job by advances in computing power. Now, at some point, a computer will be able to manage those tasks and from there it's just a countdown to "Judgment Day" a la "The Terminator" series. Not there quite yet, though.
Point taken to an extent, but are you including foreign labor with machines? Foreign labor is dirt cheap. I think although technology has had a minimal impact recently, it is outsourcing that is causing this divide, with technology having a lesser impact.
Labor arbitrage is slightly different from my point. Also, make no mistake the Chinese are already themselves being labor arbitraged by the Vietnamese.
I just think that with computing power evolving much faster than human beings can evolve, it is only natural that those at the lower end get overtaken by the leading edge of computing.
My understanding is that automation is actually a larger displacer of blue-collar workers than outsourcing. Of course, over time, that ratio shifts, so it may not be true any longer.
Its maddening because most people in the top income groups are useless paper pushers who are benefactors of the FED banking cartels useless FIRE economy.
All they do is skim off the top of the people who actually work for a living. Think about what you do and how much value your "services" would command if we went back to a barter economy.
Think of even an accountant. This is a person who is employed to keep track of each companies or individuals share of counterfeit funny money and practically useless and worthless paper assets all created out of thin air by the FED. In a simple Barter society isnt a guy who can craft a shoe more valuable? But yes, we arent in a barter economy.....yet
For the human race to go back to a barter economy would require that it forget everything it's learned over the past 10-20,000 years. Not likely to happen. Just to take the most obvious example, how are you going to make everyone "forget" that currency existed at one point and was used to make transactions more efficient?
Clearly, economic, monetary and political reforms are not complete and many people still live lives barely above "subsistence", but unless something catastrophic happens to make it impossible to implement those reforms, the way forward isn't "back toward barter", it's forward toward reform.
I'll explain it to you for one hen and an ounce of marijuana.
And this is why hyperinflation will go unnoticed for almost two years. The upper class will remain fat and ignorant. The poor too shamed to stand up. Nominally, equities will rise, as will bonds and commodities. Note, is it good that everything will be getting more expensive? Think about it......
This on the back of devaluing currentseas. The currentseas will fall together, with minor hiccups along the way. A question I asked ZH over a month ago, "Could the DXY spin its wheels at 81.5 from here on out?" I will ask again, but will rephrase this, "Does the nominal even matter at this point? What is in a number?"
How will you be able to tell that hyperinflation is hitting REAL goods? Oil prices will go up, and up, and up. The summer will start with $4 a gallon. It will end at $5 a gallon. People will say, "Well it always goes up in the summer." But then it will keep going up. $6, $7....I think it will be at $7 a year from now. At the end of the summer '11, I think gas will be at $10-$12 a gallon. This has to do not only with worthless fractional reserve currentseas, but also peak oil. Peak oil, as peak gold, silver, and iron, is very real.
And this is all about the oil....and gold, and silver, and iron....but mostly the oil.
I agree. The USDX can hover in the 80s forever, looking fine on the surface, but actually being quite a sick puppy, since it is falling in tandem with every other fiat, with the only clue as to what is actually occurring being the rising price of real things (ie commodities).
I wonder how much the unemployment figures are skewed by the number of self-employed people who have earned $150K + in the past - and are not making that now - but do not show up on the unemployment rolls either.
The poor will not leave the country. The idea is alien to Americans. There are social and economic barriers to doing so. Few poor in the US have ever had a passport. The other countries will keep the poor from entering. They have their own poor. It will take levels of repression and draft and poverty far worse than anything seen yet to make people leave.
There is a problem of overconsumption. Contrary to the lenifient belief that overpopulation is located in the third world, the overpopulation stems from the first world. One of the solutions is to depopulate the first world. Killing 800 millions sub saharan africans will do less to ease the issue than kicking out of the US 8 million people. It might take more resources to kill those 800 millions people than kicking out 8 millions people. Poors are often weak and as such do not benefit from power to get away with crime. Power is that quality making that you are treated differently from others. When poors commit crime, they get into jail. Powerful people avoid jail when committing a crime. Up to now, having a large prison sector on your soil is highly benefitial as it helps to capture resources and exclude others from getting it. Every single cent the US spends on prisons is that bit of resources others elsewhere in the world wont capture. Fits perfectly the era. Now, when depopulation has to happen, when supporting a large society of heavy consumers means dragging every one down, then why not considering outsourcing the prison sector? Deporting prisoners will help cut down consumption. Might be easily sold as it will bring lower taxation etc... Through deportation of prisoners, one might be able to get rid of a number of poors.
Isn't this a bit like saying, "People with IQs below 80 are stupid."?
Or, did I just say something stupid, thereby proving the theory?
Over the last decade, a significant share of government
employees had joined the top 2 deciles. UE in this
sector hasn't matched that of the private sector...yet.
Of course extended UE benefits are the equivalent of
being a public employee, but without productivity.
Stalin considered these fully employed classes automatic
enemies and sent them to the Gulag or the firing squad.
Therefore safety at the top isn't assured in all political
environments
Employment & underemployment stats of all groups
http://www.clms.neu.edu/publication/documents/Labor_Underutilization_Pro...
This is the way it should be. The highly motivated and intelligent are more likely to be fully employed in high wage vocations. The lazy and dumb should be impoverished. Who would argue otherwise? Would we want to live in a society where the lazy and dumb enjoy the same standard of living as the smart and motivated?
How do you account for the lazy and dumb Larry Summers?
You best hope they stay lazy and dumb enough to keep from coming up with a plan to invade your home or kidnap your loved ones.
There's a world of difference between wanting to be able to earn enough to make rent and eat and "the same standard of living" as the "smart" (which you're quite obviously not) and "motivated" (the exceptionalist's standard synonym for greed).
You are a NAZI.
This doesn't surprise me at all. Our trade policy from the early 1990s-on decimated an already weak manufacturing sector. Global wage arbitrage initially affects the blue collar class, then eventually, the white collar professionals are affected.
However, as the FIRE economy began to implode a couple years ago, the Gov't pooled (ran deficits) it's resources (bailouts) to save the FIRE economy. It was a financially monumental task, not seen since the preparations for WWII.
How long can the gov't maintain the FIRE economy? Not much longer, in my opinion. The casino ponzi-economy is not a sustainable system, and the middle-upper classes will eventually have a tatse of this depression.
As much as I hate the bank bailouts - I will concede that they likely kept me employed - as I work in the FIRE sector.
Genearlly historically this either ends with the poor having to be controlled with violence and public educations and torture or the top 1% fleeing the country or executed by the poor.
Public executions...what a freudian slip.
Public executions...what a freudian slip.
Hmm. Corelation n'est pas causalite.
It is possible that many people are currently classified as "poor" because they currently don't have jobs... The unemployment causes them to be poor, and not the other way around.
Naturally the other comments saying roughly that there are a lot of people in the US whose economic output(and income) are low compared to the average output(and incomes) of US residents...is what you'd expect to find. Bell curve. Boom.
Why Has Durable Goods ex autos surged? Quite simply tied to the cash for appliances which in many states launched April 1st. However, just like autos plunging post the rebate expiring or running out of funds this trend will reverse probably in June/July when many states will run out of $300M total funds available. We are seeing the latter stages of the positive impact of the housing credit as well this month as that ends in April. Does this point to the mantra is this as good as it gets….answer is point to yes economically. This mini economic boom in 1Q and in part 2Q has been once again engineered by the govt stimulus which as peaked.
UE is a direct result of poor management by:
gov and private business leadership..kleptocrat
(GE,Buffett, GS,Soros etc..)
out source your manufacturing base in the name of "free trade"
over regulate & tax the remaining business or take them over outright ala cap and tax for fake ecology fears, carbon anyone?
Debase your currency with public debt while
inflating markets ..now monetize debt
It would seem to the objective observer that the fall of the American super power is/was an inside job.
what and who replaces it is in doubt: China
never was a major player as the middle kingdom was job enough for them besides "China NEEDS WOMEN!"
India has same problem as China too diverse too big to control plenty of ladies though..
Japan a small Island with an aging population, nope
Europe ..same problems as China too many languages & like japan an aging population
all sucking off the socialist/debt tit.
Russia, ruthless enough but loves the vodka
too much leading to poor execution and self mutilations ala the gulags.
Perhaps no nation or block of nations can step in ..much like mogudishu somolia :the world
will be a very dangerous place as America withdraws from the role of world cop.
Many here on ZH will applaud this but the outcome will be a bitter nightmare of tragic
warfare, poverty, disease, and famine while
elites celebrate the mask of the red death
in Davos..
PS maybe the Swiss will rule the world their plan all along..dirty little gnomes.
The US is protecting supply lines. Had little to do with security of people all around the world.
As to turn into a bitter nightmare of tragic warfare, poverty, disease and famine, I guess you are talking about the US as surrendering the security of supply lines would likely impact on the US capability to pump matter from the outside into its society.
Because for the rest, a large part of the world already fits your depiction of tragic warfare, poverty, disease and famine.
What most fail to see are the large numbers being knocked down the income scales. As technology allows for higher efficiencies, less of the professional class is necessary. This has become quite apparent in the professions as only a small percentage do "well," while the rest fight for the crumbs.
Has the professional class really been hit? Or is the middle management class that has been hollowed out... the class that aspired (and imagined themselves) to be a part of the professional class, but was treated like an unnecessary layer between the professionals and the fungible support staff?
This is just a continuation of a trend begun back at the end of WWII, at first healthy, but ultimately toxic.
The governments of the West decided that they needed to create a new, managerial class of college educated elites to run their businesses/governments efficiently. A few thinkers, like Schumpeter warned them this was a mistake -- the New Class of managers would turn on the very system they were supposed to run. He turned out to be prescient.
The explosion of college graduates during the 60's and 70's sealed the fate of the West. These new elites had no loyalty or love for the industrial based economy they inherited; it was too dirty, too messy, and most inportantly too real for their tastes. They were far more comfortable working with concepts than things -- concepts are easily manipulated, and manipulation is the forte of the New Class, not management as it was supposed to be.
So began a few decades of propaganda. They pushed absurd ideas, like the service economy, where manufacturing and energy extraction were considered backwards, drains on the nation. Yeah... right. As if abandoning high paying wealth generating jobs and replacing them with low paying wealth redistributing jobs is a good thing.
The New Class, consciously or not, sought to eliminate any power base they could not control through the manipulation of numbers, words, and images, and that meant the blue collar middle class and their industrial base had to go. We now live in a nation redesigned to serve and protect the only the degreed -- credentialism and image, not meritocracy and reality are the orders of the day. And a raging case of hypocritical NIMBYism is the new norm, where consumption is great as long as the dirty work is done overseas -- out of sight, out of mind. Let someone else deal with the messy side of life, just give me the good stuff -- cheap.
Outstanding observations.
Thanks for that.
:D
Did not Schumpeter write something else? That the mass production of educated people would end with a society unable to absord them all, bringing in an ever increasing number of disgruntled people?
Problem is that unemployed managers as much as they are disgruntled can not exert any decision power as they are unemployed.
Your story is a fine story still has little to do with reality.
Many causes to outsourcing. One is pollution. Back in the 1960s/1970s, the observation a certain type of industrial production was highly detrimental to the environment was no longer an object of denial.
The solution was to outsource this kind of activity with the direct result of exporting pollution. The goods were still largely consumed in the West but without the drawbacks.
Energy extraction obeys to another logics, which was the end of the colonial empires. Each colonial power protected its turf from the other powers. As it ended, the former turfs were no longer protected and open to plunder by all. A race to loot was started.
In this kind of race, the best strategy is to eat periphirical resources first while preserving resources close to your center.
Protection of supply lines requires the capability of projecting armies as far as their supplies lines ends. As the resources are consumed, the radius of projection diminishes. Then it is much better to eat away peripherical resources first than near center resources.
Not hatred. Simply the application of systemics.
And(!) an ever-increasing amount fraud, deception and hositility in the work place. When the average person has at least a masters degree (and is six figures in debt), then beware working side by side with these people when the spots to move up (in both rank and salary) are limited--corruption and other forms of unbecoming behaviour will run rampant, both internal and external to the company.
Every college educated person (yes, even the ones who graduated from party schools) is in an 'arms race' with every other educated person for prosperity. Free markets -- in the employment sense -- seem like a nice thing to have. But, make no mistake, the competition will be fierce and the caustic consequences of such behavior will produce MASSIVE ECONOMIC WASTE through fraud, manipulation and unncessary 'posturing'.
The Russains were our enemy in the Cold War, but now our biggest socio-economic rival is each other: intra-country competition; where each college graduate is a sovereign money-earning entity unto him or herself.
"Man to man is so unjust; children, ya don't know who trust..."
I'd imagine that 3% is likely wrong. The "top two" deciles is 20% of the working population?
That leaves an awful lot of people in the 20 to 80th that are likely to be the middle class, faltering towards the bottom.
N'est ce Pas?
Poor people should underbid the Mexicans for jobs and we could get rid of unemployment and illegal immigration at the same time.
Was that sarcasm or actual advice?
Race to the bottom is limited in the US. That is not because the low level workers get paid less and less the conditions they need to support themselves are going to grow cheaper.
Reaching a certain point, workers involved in this race to the bottom will have to come to the conclusion that to keep participating to that race, they need to move elsewhere.
As the mass of unemployed will move outside the US, you can consider the mass unemployment issue as solved.
An absurdity to believe that a race to the bottom can be concluded in the US on a wage of $1 per hour. The US general environment is too pricey to allow this.
Monaco has no beggars. Not because everyone there has a decent revenue but because once turned a beggar, you are driven to the borders to leave the country.
This solution works.
Another way to look at this problem is:
Cooperate with our schooling/big business/revenue distribution/taxation system: Be a member of the party or be the enemy. Thus, unless you attend the "right" school, study the "right" subjects, and "go along to get along" with your "superiors" - you are, at first invisible - then left out to die.
This gives "moral hazard" a whole new meaning... where corruption easily prevails, regardless of the efficiency factors.
Welcome to the brave new world (borne of "necessity").
edit: perhaps needless to point out: This becomes the antithesis of a democratic system. It renders our Constitution irrelevant.