High Unemployment? Not for the Affluent

blogs.wsj.com...

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.”

The report they refer to:

www.clms.neu.edu...

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.

31% unemployment is staggering by itself, when you add the underemployed you come to 50%....desperate times indeed.

This is the best formula for violent revolution I can imagine, pity the top 10% are too blinded by greed to see it.

This helps explain why our governments don't understand the extent of the problem. The rich are able to ride out a recession, and even profit from it, because they have a large supply of capital to begin with, and can invest cheaply in assets that are temporarily undervalued during a struggling economy, only to have them regain their value once the economy picks up again. Affluent people are also more likely to have connections, and get the best jobs and get into the best schools, often for no other reason than that they were born into affluence.

Hopefully I don't sound too bitter, but I've seen far too much of this in my own life to be anything but angry about it...

The older I get the more evidence I see that there is, indeed, "no war but class war."

The privileged classes weak havoc with our economy, but it's the average people who suffer the results. They themselves are insulated from the ups and downs they have caused.

That's why we get so many politicians and bigwigs wanting to keep Wall Street unregulated and just as reckless as it ever was. They know that when they get "too big to fail" it's the average tax payer who picks up the tab for their rampages.

First to be unemployed, last to be rehired.

reply to post by Sestias


When you can eat 3 meals a day for 3 weeks and be in the top 15% of the richest people in the world, you know somethings wrong.

Rich get richer and the poor get poorer.