The rise of the unemployable underclass

By Felix Salmon
August 10, 2010
David Leonhardt's latest column is full of interesting employment datapoints. Among them:

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David Leonhardt’s latest column is full of interesting employment datapoints. Among them:

  • In 2008, only 13.2% of the labor force was unemployed at some point. That compares to 18.1% in 1980, and 22% in 1982.
  • Real wages, which normally fall during recessions, have risen in this one. Even nominal wages are up.
  • The mancession is over: “male employment has risen by almost one million this year, while female employment has fallen by 300,000″.

The overriding impression is of most Americans actually doing OK, with an unemployable underclass bearing the brunt of the recession. Maybe we really are all middle class now: there’s the unemployed at the bottom of the pile, and the plutocratic elite at the top, with the overwhelming majority sitting in between, doing OK but hardly great.

The problem is that persistent unemployment at or around 10% is unacceptable in the U.S., especially with the social safety net being much weaker here than it is in Europe. Leonhardt is right that Euro-style safety nets aren’t particularly innovative, but they do at least keep people housed and clothed and fed and living outside poverty — reasonable expectations for anybody to have, I think, in the richest country in the world. If David Leonhardt can’t think of any bright ideas for solving the persistent-unemployment problem, then the chances are such solutions aren’t going to magically appear. Which means we need to help the long-term unemployed, rather than simply ignore and forget about them.

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9 comments so far

“In 2008, only 13.2% of the labor force was unemployed at some point.”

Which is why there is desperation to claim that the recession “ended” in June of 2009, so we can pretend that those U-6s running above 16% are mythical creatures, not to mention the stubborn insistence of U-4 and U-5 in running in double-digits during this recovery.

Posted by klhoughton | Report as abusive

Good post. Welcome back!!

America is in an interesting place right now. Most simple work has been automated and what remains involves (a) considerable training to learn a skill such as nursing or technician of some kind or (b) knowledge work or (c) some combination of (a) and (b).

Unskilled work does not exist in abundance in America, and where it does, wages are driven very low by an abundance of unskilled workers.

The correlation between education and both employment and income is overwhelming.

That is what is Obama is forcefully stressing these days. He has a point…

On this topic, what do 99 weeks of unemployment checks (really generous, no?) do to the unemployment rate?

Posted by DanHess | Report as abusive

Interesting times. I donot think the basic situation in Europe is different. They have even more structurally unemployed (only often relabelled like disabled or government workers). They are more faced or will be soon the question how to pay for all this. But basically it is the same problem.
The main questions imho are:
-how a society can pay for all this;
-how can a society reduce the costs of such groups.

Especially since middleclass is likely to get some income pressure from EM’s and people and cies get more and more mobile (so can move more easily to lower tax jurisdictions).
Eg Asian countries are not going to make the same mistake as Europe did (creating a massive welfare system), so next to the availability of low wage workers they will have the advantage of lower tax-burdens.
Of course it is a nice and social thing, but can we in the West keep affording it? Affording while not breaking down a well functioning economic system for the majority.

Posted by RoelofP | Report as abusive

Europe faces the same problem, only another maiun question: how long can we still afford this.
The economic problem (next to the social one of course) in my view is that one way or another, these people have to live and will cost money leading to higher taxes for the rest. Can the country afford to do so seen international competition.

Posted by RoelofP | Report as abusive

uhh… real wages *rose*? But I’ve been hearing that real wages *fell* during most of the period before the recession. Is that an apples to apples comparison or are they two different sets of numbers applying to two different groups of people.

Because if middle class earners lost money during the “boom”, and things are picking up after the “crash” .. that would just be kind of funny.

Posted by bruce1963 | Report as abusive

Maybe I’m way off here, but maybe if govt put hard caps on how much tuition universities and colleges charge maybe there wouldn’t be such a ‘lost cause’ attitude amongst unskilled/under educated workers. I mean the rates are really disgusting and it’s not unreasonable to think this contribute to the apathetic attitudes (republicans call it laziness) of the young and poor… hard to be motivated when you feel helpless.

Posted by CDN_finance | Report as abusive

CDN, universities are simply expensive to run. It is a labor-intensive industry that demands people at the top of their professions. University salaries are already not competitive with industry (though job security and the working environment may be superior). If you push salaries down too far, they’ll lose even more of the top people than they already do.

If you want to make a college education more affordable, then subsidize it. Adopting pure socialism (government sets prices, controls all industries) is unpalatable. Don’t we have enough of that in health care already?

Posted by TFF | Report as abusive

I would welcome some discourse on the other side of this fence: the hiring process. All those unemployment checks, such as it is, are better to be scurried aside if possible when the rainy day fund starts leaking. Those benefits suck, relative terms, to an ongoing & quantifiably better contract / full-term employments.

Not enough print is being added to who, or what exactly, lurks on the opposite side of the coin: HR and recruiters. I can barely stand to work with, or through, another recruiting agency that I can not see in-person.

Posted by McGriffen | Report as abusive

I almost laugh, except for what is happening, has been going on for years, 30 years in the making, america has outsourced jobs and insourced labor, as a population you cannot sustain job growth. Good, bad or indifferent, we’ve have wrapped to much importance into the stock market, while all thier looking for is the bottom line. As a country we need to reward the companies that stay home, invest in alternative energies and nano technologies for the future, even if it’s not good for wall street. Main street and wall street are a parralell universe. We sold out the american worker for graft and greed.

Posted by aussie2390 | Report as abusive
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