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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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Race to the bottom
Exactly the point.
Who benefits the most from low interest rates? The highest earners..
the lowest earners still have to pay massive and extortionate interest rates. And those who can put by a bit of savings get penalised
Any Austrian economist will tell you that mass unemployment is simply a function of wage controls. Get rid of "minimum wage" laws, and unemployment will come down in a flash.
Of course, that would destroy Uncle Ben's "output gap" excuse to keep interest rates low.
Putting two and two together, it is likely that prices of goods consumed by wealthier Americans will begin to inflate, reaching bubble proportions. Then what will the Fed do? Let the bubble grow even further until it pops itself? Or raise rates and bring on the Greater Depression forthwith?
Central planning isn't so easy, is it Ben?
Then watch safety go out the window as those lower wages would come from entities willing to cut corners as well as wages. That's something that will happen no matter if you're in a First World, Second World, or Third World country.
The minimum wage isn't there to provide a living wage(and shouldn't be used to that end by raising it), but as a disincentive against mistreatment of those in the low-end of the labor market. That is, said low end is the set of people for which have only a Hobson's choice for work - where all the options have (nearly) the same opportunity costs & conditions.
Thank you for this response. Very eloquently put and certainly a valid and important point. Nice to hear the other side.
My only question would be the sustainability of a model where the subsidies supporting the unemployed are funded by a federal debt growing more than 20% per year for 2 years now. When the system breaks, the resulting poverty may or may not be worse than the mistreatment you refer to. In the end, are there any free lunches?
Of course there are free lunches!But they are reserved for the Banking sector and elements of the military-industrial complex.
And politicians, of course.
Free lunches are for well connected corporations, the poor just have to suck it up...and be compliant slaves.
How is this surprising?
Once again, the US has been investing on bettering its environment through matter use for decades now.
One consequence is that the labour output of certain jobs no longer afford to live on the US soil.
The environment is too good.
If a US road sweeper stated he wished he could live in Glencoe, US people would laugh at him. A road sweeper can clean roads in Glencoe, he cant live there. He cant own a house there.
On the global scale, the US is more and more the Glencoe, Weston, Wilton, Diamond Valley, Winnetkas... of the world.
Less and less, a person with a clerk work output can live in the US. Clerks will live elsewhere in the world.
This is the root of the crisis. Top earners are not in crisis as they are in their fitting environment. People who are in a crisis are people who no longer live in a fitting environment.
The whole question is to know how long the US can keep subsidizing these people to stay on the US soil or if they stay, offer them something else than a servant status or living in a ghetto behind a wall.