WASHINGTON – The gap in unemployment 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 conducted for the Associated Press.
Jobless rates 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.
U.S. 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 percentage of Americans working or looking for work.
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.”
“We have to make the investments necessary to attract good jobs that pay good wages and offer high standards of living,” he said.
While the link between income and joblessness may seem apparent, the data is the first to establish how this factor has contributed to the erosion of the middle class, a traditional strength of the U.S. economy.
Based on employment-to-population ratios, which are seen 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 is available.
“It’s pretty frustrating,” said 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 previous nursing experience or because she wasn’t certified in more areas.
Guerra said she now gets by doing “odds and ends” jobs such as a pastry chef, bringing in $500 to $1,000 a month, but she said daily living can be challenging as she cares for her mother, who has end-stage kidney disease. “For those trying to get ahead, there should be some help from government or companies to boost the economy and provide people with the necessary job training,” said Guerra, who hasn’t ruled out returning to college to get a business degree once her financial situation is more stable. “I’m optimistic that things will start to look up, but it’s hard.”
Last year, the average length of unemployment for U.S. 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. Because many mid-skill jobs are being lost to globalization and automation, recent U.S. growth in low-wage jobs has not come fast enough to absorb displaced workers at the bottom. Low-wage workers are now older and better educated than ever, with especially large jumps in those with at least some college-level training.
“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. “If the economy were growing enough or unions were stronger, it would be possible for the less-educated to do better and for the lower-income to improve. But in our current world, where we are still adjusting to globalization, that is not very likely to happen.”