For those wondering why luxury spending is back even as unemployment hovers close to 10%, consider this: unemployment among the affluent is only 3%.

According to a study from Northeastern University’s Center for Labor Studies, unemployment for those in the top income decile–individuals earning more than $150,000 a year–was 3% in the fourth quarter of 2009. That compares with unemployment of 31% for the bottom 10% of income, and unemployment of 9% for the middle decile.

The differing rates of underemployment–including those working part-time for economic reasons–are also notable. Underemployment for the top 10% was 1.6%, while the bottom was 21%.

In other words, the top 10% is experiencing what economists would consider full employment.

“These stark findings clearly reveal the economics costs of underemployment in the current U.S. economy are disproportionately born by workers at the lower end of the income distribution,” the report stated. “Thus underemployment contributes in an important way to the high and rising degree of income inequality in the U.S.”

Introduction

Since the onset of the Great Recession of 2007-2009, labor market conditions have deteriorated dramatically for U.S. workers in the aggregate. The basic core facts are generally well known. The number of employed civilians (16+) in December 2009 was more than 9 million below its estimated level in November 2007, the month before the recession got underway. Total unemployment has more than doubled over the past two years, with double digit unemployment rates prevailing between October and December. At the same time, the number of underemployed; i.e., those persons working part time for economic reasons, has also more than doubled, reaching a new record high of 6.4% of all of the employed in the fourth quarter of 2009.1 In addition, the nation’s civilian labor force has actually shrunk by nearly one million over the past year rather than rising by 1.5 million as earlier projected by the U.S. Bureau of Labor Statistics.

What has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets.