Guest Post: Unemployment for Those Who Earn $150,000 or More is Only 3%, While Unemployment for the Poor is 31%

Washington’s Blog

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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About George Washington

George Washington is the head writer at Washington’s Blog. A busy professional and former adjunct professor, George’s insatiable curiousity causes him to write on a wide variety of topics, including economics, finance, the environment and politics. For further details, ask Keith Alexander… http://www.washingtonsblog.com

62 comments

  1. RebelEconomist

    Not sure how meaningful this is. Presumably people who were earning (relating unemployment to current income really would be meaningless) $150,000 have some kind of employment advantage, so that their fallback position is a lower paid job rather than unemployment. Perhaps a better analysis would be to look at the percentage decline in income (from all sources including unemployment benefit) of those initially in various income brackets. Unless your intention was to make a rhetorical point of course……

    1. Bill Smith

      I think I get his point… A lot of the $150k people who became unemployed then took jobs at $120k. Thus they are not in the $150k unemployed statistics. People at the bottom had nowhere to fall back to.

      You see about the same thing when the organize the charts by education level. Post graduate/4 year college/2 year college / high school / didn’t complete high school.

      1. ChrisPacific

        That was my thought as well. The only circumstance in which I can see a $150k earner being unemployed for any length of time without dropping an income bracket would be an extreme low supply/low demand situation – i.e., highly specialized professions where there are both very few jobs available and very few people who are qualified to do them. I would guess that accounts for the 3%. Absent evidence to the contrary I’d say this is probably normal for this level of unemployment.

        The point that 10% unemployment feels much higher to those at the low end of the scale is valid, but probably true of any recession.

      2. kievite

        Bill,

        I think that deterioration of wages during hard times is more dramatic that $150K->$120K. In IT I see moves from over $100K to less then $50K all the time (“50% off” applied to humans). For older folks it’s not that uncommon to land in junk temporary job without benefits.

        That was/is especially common situation for IT staff who lost IT jobs in financial sector. Some high fly IT consultants connected with servicing trading platforms and all this “risk modeling” crap are simply no longer required.

        I see a lot of moves move of IT specialists into temporary “helpdesk” and “tester” positions at $35-$45K from “over $100K” bracket.

        1. Alan

          The whole thing is comlpetely phony. If someone making $150K loses their job and collects unemployment for a year they fall into the lowest bracket and add to that bracket’s unemployment rate. That’s how it gets so high. I’m sure the lower brackets are suffering more than higher brackets but this “research” won’t tell you how much. Phony politically driven trash.

          It reminds me of all the phony “research” that “shows” our medical care is substandard because our longevity is less than some other countries…but when you correct the statistics for all the extra people who die on our highways (longer commutes) and from guns (inner city murder rates) we live as long as in Europe. Of course genuine tests like longevity after cancer diagnosis shows our medical care is much better. Too expensive, not as good as it should be, but still better.

          People who promote this garbage should be called out… but as long as they have the PC point of view, they won’t.

          1. Vespasian

            100% agreement with you, Alan. Without bothering to look at the study to see how they categorized Earners’ Income (current? 2007? ’09?), and then adjusted to reflect high-earners dropping to become mid-earners, and starting salaries of grads now vs. expected in years past … these #’s are useless and making any interpretation based off them is reckless.

            Overall, this is a disappointing, confusing post that says nothing of significance but makes some people think they’ve evidence on their side.

    2. Terry

      People in the upper income levels are paid those salaries because they are in high demand (for whatever reason). It is reasonable to expect that the demand for such services would remain higher than for low wage/income jobs in a severe recession.

      It’s not equitable, but it’s reasonable.

      1. Cullpepper

        In demand, *or utterly corrupt thieving bastards who are untouchable due to graft and a lack of white-collar crime enforcement*.

  2. Azarean

    You’re not sure how meaningful 31% and 19% unemployment are in the two lowest income deciles?

    What exactly would you consider meaningful in that case?

    1. Blurtman

      “common accepted model that full employment impels inflation by to steep wages rises” is absolute rubbish and was proven to be absolute rubbish during the Clinton administration. Yet this garbage is still taught at top schools like UC Berkeley, my alma mater. I can’t begin to describe what absolute rubbish I was forced to regurgitate in economics and finance classes to obtain a passing grade at that school. Now they run a leading program in financial engineering. Good grief!

      When the scientific method came onto the scene hundreds of years ago, the charlatans fled to the social sciences where hypotheses lacking backing data, predicitivity and not based upon experimentation could continue to be accepted as dogma. This is economics.

      1. Cog

        You mean all that stuff about “demand pull” and “wage push”?…Oh no, must go find happy place. Need to be happy.

  3. /L

    Interesting figures especially in relation to the common accepted model that full employment impels inflation by to steep wages rises. Is there then any common sense in focusing on the average unemployment level when anticipating inflation?

  4. Thomasina Jefferson

    Capitalism doesn’t work with full employment for everyone. Capitalism needs a large reservoir of unemployed so that it can keep wages down.
    Washington’s post is further evidence that this is a class society with a different set of rules for Capitalist and Workers, respectively.

  5. alex black

    It’s always fun to see Arianna Huffington add her insightful perceptions – and then remember that she accidentally married a gay man.

  6. EB

    Mathematically the solution is simple. Just increase the minimum wage $150,000; then unemployment should decline accordingly…

    1. NOONBALLOON

      Yes, I’m actually a little surprised that Arianna didn’t come up with this solution herself.

      Of course there’s also some disparity between the total numbers of labor and that of total manangement folks so, let’s just move labor up to manangement and visa versa. Everyone will be happy-go-lucky and sunshine and butterflys will fill our tummy’s with tickles.

  7. Blissex

    Well, from a conservative point of view this proves that the market works!

    The market rewards with job safety and higher compensation productive, creative heroes of capitalism like lawyers, doctors, managers, investment bankers, and punishes the exploitative parasites, those who don’t want to produce or create, the welfare queens and the strapping young bucks, with unemployment and low earnings.

    For a conservative the conclusion is the celebrate, and “good riddance!” to the the losers who would like steal the property of the winners to give themselves free CRA mansions, free welfare cadillacs, free food stamp t-bone steaks.

    :-)

    1. DownSouth

      Where have I heard this sort of mind-numbingly stupid, socially pathological rant before?

      Oh, I remember!

      “Atlas Shurgged” is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose either purpose or reason perish as they should.”
      –Alan Greenspan, Letter to the Editor,
      NY Times, November 3, 1957

      http://graphics8.nytimes.com/packages/pdf/business/20070915RAND_nyt_greenspanletter.pdf

      1. NOONBALLOON

        Yup, and the book’s examples relating to the Twentyfirst Century Motors Company make much more sense.

        Let’s just apply those same concepts over at GM and watch the innovation take off like a rocket.

        1. Skepticus Maximus

          Umm, I’m pretty sure he was joking when he wrote that.

          At least I hope he was.

          SM

  8. Greg

    If a rise in the minimum wage increases unemployment, as the neo liberals so loudly contend, then a lowering of the wage should increase employment. In affect by laying off way more low wage workers they have raised the average wage level (and this was in response to a credit crunch) so they have gone against what they say should be the response.

    They may be correct in that lowering average wages will increase employment (but still not stimulate the economy due to lower aggregate demand) but they are acting counter to what they say is the right business response. They ought to be retaining low wage workers and letting go the high wage earners in order to truly bring down their avg costs of labor. Removing salaries that are all below the average will ONLY raise the average cost.
    Of course its likely that their responses have nothing to do with trying to lower costs of labor but simply they are acting on an opportunity to further screw the lowest wage workers………because they are bullies.

    1. run75441

      Bill:

      No, perhaps a greater emphasis on service versus manufactured industries and a skewing of productivity gains from NonFarm Labor towards Capital since the eighties. Capital Appreciation has been the name of the game and it doesn’t employ Labor, whether educated, or not in either case.

  9. za

    Something similar happens any time the oligarchs can marginalize and isolate.

    Nazcrash *felt* like a depression for members of one particular segment of the economy. Yet, when hundreds of thousands of jobs were outsourced during the recovery, Bush’s Labor Sec told us to “get over it.”

    What is shows me is that there’s a rigid corporatist caste system with laws in place allowing one caste to loot from the others.

    The Fed is supposedly interested in quelling deflation. This is nonsense; wages and prices deflate all the time, yet this is held up on the altar of ‘productivity improvements.’ What it really means is that it wants to prevent deflation in assets that are securitized.

  10. Dan Duncan

    Hume’s Guillotine…that’s what this post needs.

    Hey, GW, how about actually laying out a prescriptive argument?

    The poor are getting hammered in this Recession. [As if they didn’t get hammered in every recession.] This is gut-wrenching and sad.

    You’ve laid out a completely self-evident and obvious “is” on the state of the world.

    Now what?

    From the comments that follow, it appears that the “what ought to be done” is just derived…magically conjured, if you will?

    Do you actually have some proposal?

    Or, are you just putting this out there for the reptilian, non-thinking, reflexive reflux?

    “The poor are suffering more in this recession.”

    “Neo-liberal capitalists suck!”

    1. Dave of Maryland

      You could start by changing terms.

      Instead of “unemployment”, say, Denial of Employment.

      Instead of “deflation”, say, Lack of a means of exchange.

      So we have a lot of people denied work. We also have a lot of others who work but are still unable to afford the basic necessities of life. And there’s no excuse for this. No matter where you are on the economic ladder, no matter what your education or sex or race or background, if work does not give you the necessities of life, you’re being robbed.

      What galls me about all the financial blogs are the insistent references to all that money looking for someplace to invest itself, while the man on the street can no longer afford his mortgage. Money has been physically removed from society & replaced by useless, poisonous debt. The government’s no. 1 job is to provide its citizens with means of exchange, in other words, cash money.

      Even with jobs, when there is no money people will starve. Enough of that & the government will quickly discover its no. 2 job: The tranquility of the masses. Give Johnny a job & he’ll happily bang away at it. Take his job away, take his money away, and he’ll be your never-ending pest. All indications are that Washington is about to learn this lesson the hard way.

      The longer this festers the more extreme it will get. Just like a war. Just like any war. If we had never invaded Iraq, there would never have been IED’s. If the Israelis had been nice to the Palestinians, there never would have been suicide belts. Or homemade rockets. In the current economic disaster, radical new ideologies are being forged as we speak, and not just by the Tea Party people.

      Someone said the next economic crisis would be based around loans that would never be repaid. That crisis is here now. The next political crisis will be based around an ideology that, far from excusing revolution, justifies it.

      For example, if Washington cannot or will not issue specie (cash money) then what good is it? Since I live in Maryland, I am wondering if Annapolis can issue its own currency. Well, yes it can. All it needs to do is leave the union.

  11. PJM

    Now, Im seeing real discussions about american problems in Naked Capitalism. In stead blaming others, the debate should first discuss internal problems. Without thinking in our problems and discuss them, we cant have a real picture what are the real exterior threats.

    As a foreigner and a strong believer in USA, the benchmark and model for the free world was USA. That was what I was thought since boy. “Learn with them”, theyre lead the free world even with a lot of problems, my father teached me. But today USA inst the model anymore.

    When some americans reads criticisms from outside they react like racists, chauvinistes or even worst. They tend to think that outside criticism is anti-americanism. This the real problem of USA. Acts like an empire. In Portugal we had the same problem.

    Long way ago, Portugal was big. The criticism from outsiders werent welcomed and the dictatorship took the isolationism as the choice because it was hard to swallow some external opinions. This is a map from Portugal, when I was born:

    http://1.bp.blogspot.com/_vIYSzbdzouU/S86jnMtkA7I/AAAAAAAACHo/euWKVNYyPj4/s1600/galv%C3%A3oportugal.jpg

    In http://tempoquepassa.blogspot.com/

    The title above the map says:

    “Portugal isnt a smal cowntry”, in portuguese.

    That map isnt complete because we had Macau, now China, Cabo Verde Islands, Guiné Bissau and Santo Tomé & Principe.

    But when I was born, Portugal was one biggest countries of the world. With a lot of natural resources like diamnonds, exotic trees, cotton, precious stones, tungsten, copper, and later, plenty of oil and natural gas. The generation before my fathers thought that we could live without others and every criticism from outside was blamed. We were one big empire and they thought Portugal could be better than USA.

    Later we discovered that USA isnt only money, militar power and son on. USA was the first cowntry that was a creation of one revolution. In Europe, french revolution is a kind of landmark, but in reallyty, american revolution was the real revolution where the freedom and democracy was the aim of the known american fathers, like Benjamim Franklin (one mason with a strong influence in the french revolution), George washington, and others.

    Today USA isnt the model to us. In fact, USA become the worst thing in one democracy. Today, USA and Russia are very similar. But americans dont like to know this simple fact: USA is in decandence and isnt the role model for the world. A lot americans dont like to read some criticism. In the past this criticism was linked with communism. But today they link with terrorism and anti-americanism. Americans are blind to acept others opinions and critics. They think that these kind of opinions are hate for USA. These americans are fools.

    But when some americans start thinking in their own problems and what their cowntry become, they realise that USA is a very ugly cowntry. For a foreigner who lives outside USA, it is hard to swallow to see how americans wants to give lessons to others. Because USA has changed and looks a rogue state, others dont like to read some criticism by some arrogants americans. Others dont like to see how USA become a rogue empire that wants to be the sheriff of the world.

    Some years ago, when USA had wars, we tend to believe that was a fight between the goodones and the badones. This admiration and respect with USA values gave to spagetti westerns a lot of sucess around the world. I rememeber in Europe the sucess of these kind of movies because it was like seeing the good americans agaisnt the ugly americans, as in the real world, the good americans agaisnt URSS, China, and others ugly states.

    But today, what we see? USA cheating their allies to control oil and gas pipelines. Democracy and freedom were only words to plunder others resources. The change in american presidency gave the same bullshit: words but the same plundering. For a foreigner, mr. Obama and mr. Bush are the same faces of the oligarchs and american stablishment.

    The first error from mr. Obama it wasnt the delay to leave Iraq and afhganistan. No, these delays arent the real problem. The real problem was mr. Obama didnt abolish the legislation of Homeland Security. The real problem of mr. Obama is giving the same bullshit to people to control the civil rights. Now mr. Obama is spreading fear mongering about nukes and some kind of weapons that terrorist can have acess to have allies around the world. The same bullshit as mr. Bush.

    But for a foreigner, isnt mr. Obama versus mr. Bush, as some americans pretend to think. No. This is USA versus world. This is a rogue state versus the world. For us, the only thing that we see is USA authorities having rogue behaviour. And americans should realise that we dont want to know what guy is the White House. For us, the guy is allways the same, no matter the name of the guy, his color, his party or his religion or even sexual orientation. No, for a foreigner, the guy is the leader of USA and represents american people. so amricans should realise that White House mistakes are american mistakes. As the Puttin mistakes were Russia mistakes. Or in the past, Staline behaviour was Russia behaviour.

    Some americans should realise that USA is loosing support around the world. Americans should realise that around the world, USA isnt the same ally as before. In Europe, governments are falling because their support to USA. In Germany they discuss openly the war in Afhganistan. And in my cowntry, some voices are starting discussing what the hell are we doing in others wars. For what are we fight in Iraq and in Afhganistan? War against terror? Or war to help USA plundering others resources?

    Of course the americans nationalists (strange concept of american patriotism) dont like to read these kind of criticism from outsiders. They tend to think that we hate americans, or were anti-americans. But it isnt true. A lot of criticism are real concern with american decandence and blindness. And a lot of criticism is the ally betrayed by USA and his misbehaviour. A lot of criticism is resentment because americans pretend to be give lessons but they live in an ugly political and economic system. A lot of criticism is denying the right to americans to give others lessons because USA is a rogue state.

    In my humble opinion, americans should be more polite against others countries. The arrogant americans will pay for this misbehaviour in the future. One these days, USA will be looked by the world as North Korea is today. One these days, USA will have a lot of enemies and just a few puppets who follows his master. Today, in some political circles, UK is the american poodle. why this happen? British and americans should make an internal debate.

    China is becoming the strongest economic power of the world. In the past USA bought allies with money, markets and guns. Today is China. But if USA doesnt change his misbehaviour and americans dont start to be more polite with others, and respect them, one these days, China will be a Democracy with a lot of allies, and USA will be alone with his british pooodle. Americans arent doing their homework.

    Another point that americans should realise is the seeds of revolt inside USA. Chuck Norris, in CNN, showed that USA could split and end as we see today. For us, USA should be watched carefull because could bem a instability factor in the world. Even we must to give serious attention the instability inside USA that could trigger another civil war.

    Americans should think better what is happening inside USA, outside USA and around the world. Americans should pay attention for some signals around the world. USA is loosing support around the world, is in troubles, is having some behaviour as rogue state and is arrogant to others countries.

    Americans should listening more and talking less to others countries. Because, USA isnt a good model. In fact, USA is showing how a democracy can decay and starts having behaviour as one soft dicatorship. Like Russia or even venezuela.

    1. NOONBALLOON

      PJM,

      Your thoughts are interesting, and probably widely held, and perhaps justifiably so, from an external perspective. Some might say that the US is has become a victim of its own success. Adam Smith’s capitalist system approach allowed for the growth and expansion that propelled the US forward to its present day status, however, it also allowed for the total fat which could be trimmed from the private sector in order to in fact support the more socialist perspectives of the welfare mentality. And so now it seems that we’re all in favor killing the golden goose, which may actually be required in order collapse a completely corrupted, and now completely tangled mixed economic and regulatory system. The greater question might be, which system shall we employ to replace it, and will it actually work for the longer term? The choice is actually pretty simple, and you have alluded to it as well….Freedom (Capitalism and the efficiency of the free-markets) vs. Government Control (perhaps an MIT/George Soros pushed Control Economy melded within a global economic system).

      While we rationalize ideas like the raising of the minimum wage, and make back room deals to give more influence and power to our labor unions, China, and others, peg their currencies to the US dollar, and their wages stay flat, despite fantastic economic growth over several years time. We bind ourselves with more and more regulation, while China actively smooth’s the pathway for its industries. Although, we seem to be following in their footsteps with regard to Government Motors. But why would any business wish to locate in the US vs. China? What’s the actual benefit? American Exceptionalism…not anymore! There’s probably a strong argument to be made for the US government actually working to errode and destroy anything and everything that might provide for some form of exceptional value, perceived or otherwise, within the US. Although, we do have to ask ourselves “exceptional compared to what”, and perhaps there’s still some value to be found within certain pockets/markets. However, what’s really interesting is the total extent to which China and the US have fought to keep their banking sectors separate and not intermingled (For example: US Bear Stearns and China’s Construction Bank).

      China’s Citic May Not Go Through with Bear Deal http://www.cnbc.com/id/23647539

      “Bank of China and China Construction Bank are said to abandon endeavors of going public in New York and to go for a Hong Kong listing alone, due to stricter IPO requirements in the United States.”

      http://www.accessmylibrary.com/article-1G1-127779297/bank-china-construction-bank.html

      As for positions held in countries such as Afghanistan and Iraq, we only have to look a map to understand their importance to overall stability and containment strategies. I certainly wouldn’t defend the arguments for WMDs or the terrorist threat with regard to this same positioning, but I wouldn’t belie their overall importance either, nor would I say that the US has exploited its positions to capture, control, or unfairly benefit from the natural resources of either of these regions. The evidence just isn’t there for that.

      But for now, we’ll probably continue along our path to provide lots of lip service and bowing to every cheap dictator that might help sustain, or advance, our current position.

      1. PJM

        Dear Noonballoon, I have some ideas what is best for the world and even for USA. But I would like more to give some opinions how I would like to see my cowntry. Maybe is the best to show what I believe is better for USA also. However I respect a lot the american people, even when I give strong and hard opinions against some american opinions. So i wish to see american people discussing more deeply their problems and listen others opinions, even doesnt look the best for USA.

        We need a strong USA, but this strenght should come from political leadership and not only from weapons. I still believe the USA is the best ally to give some dreams to the world. As I said and you agree, more freedom, capitalism, less governement and more civil society. More internal and external competition, more respecto for the people. Everywhere in the world.

        But the leadership should come by defending civil rights, less fearmongering security. The changes in the USA are showing a decay in the respect for the peoples rights inside USA. Some bad examples are red flags for us, external observer. For example, is hard to swallow for us knowing that the police can arrest a tweleve years old child in the school, in from his mates. Is this normal in a democratic society? The child scrapped a table and the political power uses these kind of physical force against a poor child? Who never scrapped a table when boyschool? I did. I did worst things like glue some teachers object. I was disciplined by the school. But never, never I had afraid to see cops to arrest me because I was some kind of crazy child. Even in one dictatorship I never was afraid of to be arrest by these chool behaviour. Even during our dictatorship!

        But that sad episode it wasnt only a isolated case. We can start with the Abu Ghraib case. It wasnt a behaviour from a democracy. But, as a pattern, we still have Guantanamo. Isnt an concentration camp? It is. It was closed? No. So, when this concentration camp is closed and USA gives to every man the right to live as a normal human being? Even the criminal should have the right to live as an human beeing. This is the first landmark of a Democracy. why mr. obama lie to the world?

        In Europe we lived with terrorism some years ago. Even some countries still have internal terrorism, like Spain. But even them, the terrorists, should be prosecuted as an human beeing. But when one prisioner hasnt legal rights and is treated like an dog or even less, the Democracy looses his moral superiority. So, USA should understands that his behaviour inst one of a Democracy. USA behaviour must to change to be acepted like a normal and well functionationg democracy.

        Other legislation, borned after 9/11, is an atack to civil rights. Not only an atack to foreigners civil rights but american people civil rights. To live in a free society means to have some degree of risk. Even to die in one terrorist atack. Some europeans countries lived with the threat of terrorism but never had some civil rights cuted because the terrorists. On the contraire, having civil rights cuted is a victory of terrorists. Is their aim: change our freedom because they hated the free societies. Why USA didnt study the european past and learn with us, to fight terrorism? Why these kind of civil rights violations? Doesnt make sense.

        Bob Goodwin said that the world changed, not USA. Yes, the world changed, but USA changed too. USA changed and become more similar to bad democracies, like Russia or even Venezuela. USA is today a formal democracy, not organic democracy. Some say that USA become a banana republic without bananas. I dont think that USA is a banana republic. Yet. No, I dont think so. But is towards these kind of “democracy”. Maybe, as you said: USA is a victim of his own sucess. I tend to believe the same thing. USA won the cold war and lost his soul. Because in old days, USA wanted to be the opposite of URSS and China. Without these enemies, USA become more similar to bad democracies.

        Sincerely I wish a good USA. I made vacations in USA and I loved. I have some family in USA and they still believe that USA is a good cowntry, but not as before. And I believe that the world needs a good USA, a strong USA and a well balanced USA. I wish american people to have a strong internal reflection. And understands that the world is changing and is more exigent with USA. China will be the next superpower in the world. And the best ally to fight the dictatorship in China is one good model democracy as USA. If USA become much the same China, I think the world will have to suffer to avoid future shocks. And it will more dificult to avoid a Third World War.

        We need a strong democracy in USA, with freedom and respect for civil rights. We need a better and strong american society. We know that USA wil never be a perfect model to the world. But we dont want to see USA like Russia, Venezuela or China. We need to improve our democracies, not decaying ours free societies.

        I still dream with a world where the Democracy, Freedom and respect for every human being is the main goal of Humanity. I still hope to see americans with the same dream. I really hope.

        I still believe that bell in Philadelfia. And hoping that bell having some meaning to USA as has to me.

        1. NOONBALLOON

          PJM,
          For the most part, I think that you have the right idea here. I’ve never been too happy about a lot of the “applications” that were made available as a result of the Patriot Act. I think we tend to get lulled to sleep when we get comfortable with the intentions of one administration or another. Perhaps we tend to trust that each successive administration will use such tools protect, rather than harm its own citizens…and that’s fool’s paradise! Or maybe we like to believe that such legislation will just sunset and go away as it was originally intended…again, rarely true if it’s at all useful for the current agenda.

          I also tend to agree with you in that the US has certainly changed along with everyone else. Bob’s comments have merit, but my old-man likes to tell me that everyone got fat, sassy, and stupid, and that wolves just saw their opportunity and took it. I like to tell him that imperialists are now firmly seated at the table, and that both the wolves and sheep alike are now on the menu.

          But hey, it can’t be all bad news, all of time. Americans are finally starting to wake up pissed, and that will promote change that we can all believe in…just sit back and watch, because nothing lasts forever…

    2. Bob Goodwin

      America was loved because of its power when the world had powerful evil, such as Nazi Germany, Communist China, and Stalinist Russia. Having defeated each of those enemies, we are now simply a power without an enemy. The love we used to enjoy is now resentment.

      America can (and will) be left behind. But it is the world that has changed – not America.

      1. alpwalker

        Did the world change or did they just start seeing us as we really are? At the same time we began to believe and act on our own propaganda a bit too much. During the Cold War, some may have viewed us as the lesser of two evils. Now that we’re standing on the trash heap by ourselves, there is no greater evil to be favorably compared against.

    3. LeeAnne

      Chuck Norris is an asshole.

      Awright, the US is rude and I have to put up with outrageous rudeness from my fellow men and women in the city. The Empire is gowing down and we’re going to rot.

      Brush up on your English.

  12. Dave

    The higher income categories are less easily replaced by automation and offshoring. (especially if protected by government regulation or unionized)

    The above factors make full employment in the future impossible.

    1. Glen

      I question if that’s true. Obviously some of the highest paid people in the world running Wall St, ran their companies into the ground. Outsourcing CEOs to India for say, $10K a year, would be a tremendous cost savings to the company, and in all probability would have resulted in better corporate performance.

      The easy answer is that the people running the company DECIDE who to lay off, and this tends to be the lower paid workers. This is covered in Econ 101 in the chapter titled “Shit Rolls Down Hill”.

  13. kevin de bruxelles

    Maybe I’m confused but it seems to me that by definition families with income over $150,000 a year would have low to zero unemployment since in order to make that much money you kind of need a job. And given that the US has minimum wage laws, it also seems that by definition you would need to be unemployed or close to it to be in the lowest income bracket. So the numbers presented are hardly surprising. All these numbers are saying is that people making a lot of money tend to have jobs and people who don’t make much money tend not to have jobs.

    What would be more interesting is the rate of change for each bracket. For example if a family were relying on one income to put them above the $150,000 bracket, when their bread winner loses her job then this family would presumably move into the bottom bracket or close to it. How often is this happening?

    Typically the core underclass is outside of the real economy and are basically unaffected by a recession. They are either unwilling or unable to work in the real economy and so they live off of benefits or informal (often criminal) income. What probably is happening is that people on the edge who are losing jobs are now being dropped into the underclass along with their children. And once in the underclass it is very difficult to get out due to the cultural pathologies which go along with living in the trailer park, ghetto, or barrio.

    But in order to understand any of this we have to see the rates of change for each income group / social class.

  14. edward lowe

    I suppose I am just confused by the commentary. Lower income, and lower educated people have always been more vulnerable to economic shocks. Why is anyone surprised by this? This vulnerability gap certainly helps explain why my mindlessly-liberal academic friends are still wobbly in the knees every time Obama opens his mouth — and why the apprantly better off than thought tea party folks tend by both employed and whining about paying any taxes and immigration mostly (hello 1985!).

    This recession is simply not real or not that serious — yet — for about 20% of households in the higher end of the distribution. SO, they are back to fighting over tax cuts, immigration reform, and who should be legally allowed to marry whom.

    Now, before anyone goes on about “value added labor” being the natural cause of this natural-seeming outcome, I would recommend that you go back a read a little about political-economy in general, and the problem of “enclosures” and the rent-collecting or asset-investment opportunities that they create. Doctors, lawyers, financiers, even college professors like myself, are not necessarily producing the only value added services to society and, thus, we are still employed. We simply have a legally sanctioned strangle-hold on the services or token-values that people perceive that they need or want, and our institutions are charging basically whatever we want for access to these services. Sorry, but, to my mind that is not a function of “value-added” labor. Traditionally it has always been understood that the rentier-class are the true parasites of the economy.

    The very-high unemployment rates among former construction workers and manufacturing workers, as well as other petty service providers to the suburban dream are largely a function of the symbolic and market value of the homes of the top 20% having declined, and the value of the labor associated with making largley cosmetic “home-improvements” have declined as well.

    1. edward lowe

      lol…too early to post comments! Sorry about the spelling mistakes, college professor, indeed!

  15. Jackrabbit

    Have you seen any Squid ink???
    In the last few days I have noticed a number of postings on several blogs (baseline scenario, huffington post, new york times, and naked capital) that have made statements to the effect that the financial crisis was caused by the government, and a few that have denigrated the blogger or other commenters.
    Readers should be aware that blogs are an open forum. Anyone and everyone is entitled to their opinion but blogs are subject to disinformation and attempts at influencing the readership.

    I can not know for sure if these are genuine attempts at such influencing or if some articulate people suddenly came to the conclusion that attention should be focused on government failings. However, focusing blame on government seems to run against the grain of most participants on these blogs. Most have concluded, I think, that government failures have been driven by regulatory and political capture and not by a simple lapse of judgment or irresponsibility. I offer you this exchange as a possible example:

    Yesterday, at 7:38pm I posted a rather long post on Baseline Scenario in the Simon Johnson’s post on “The Sickening Abuse Of Power At The Heart of Wall Street”:
    Implications of Toothless Regulation and Weak Reform
    If it becomes clear that US banks have captured not only the regulatory system but the political system, the world will be forced to make a judgment about the wisdom of allowing powerful financial interests to control the political establishment of the world’s reserve currency. There has already been talk about replacing the dollar as reserve, it is logical to expect that those talks will take on more urgency.
    And I concluded:
    It seems to me that politicians that coddle the financial industry take the dollar’s reserve status for granted and inadvertently put the American economy at greater risk.

    A response from “Barbara” shortly thereafter (8:12pm) was:
    While Goldman benefited from the subprime meltdown, it didn’t cause it. It was Congress that actively encouraged the extension of mortgages to insolvent borrowers… Congress was so diverted by its desire to reward financially supportive interest groups that the primary interests of the people became an afterthought and tragedy resulted. It’s time that attention be re-focused on the deficiencies of government and not the public scapegoats being offered up in their stead.

    When I first saw this post I didn’t think much of it, but overnight I began thinking about posts with a similar tack on other blogs I had read – attempting to redirect public wrath to government instead of the banks.

    Thankfully, “Sara” at 2:55am this morning wrote a post to set the record straight, saying (in its entirety):
    Barbara- you have sipped the Kool Aid. For years Fannie & Freddie loaned to the working ‘poor’ without any significant increase in mortgage failure or foreclosures. Only after Greenspan designed low Treasury rates to push capital elsewhere did the investment banks start bundling mortgage-backed securities to sell to conservative investors. It worked out ok until they ran out of ‘product’ and decided their risks could be ‘minimized’ loaning to folks with no income and no assets. At some point, Freddie & Fannie had to try and compete as this predatory lending soared.
    But it is total drivel to claim Congress promoted lending to inso,vent borrowers. Can you show one iota of evidence ?
    That regulators failed and Glass-Steagal should never have been cancelled–that is true. That some folks still rationalize the benefits of the derivative market and remain addicted to the notion that more leverage means more capital sizzle–and that is good for growth, etc.- that is more Kool Aid.

    This exchange also reminded me of a guest post on Naked Capitalism a few weeks ago that, after a lengthy and winding argument, concluded that the many failings of the Fed as an institution should be our primary concern and NOT the failings of those who arranged the AIG backdoor bailout – because this was an extraordinary situation that the Fed (i.e. the individuals responsible) was not prepared to deal with. The guest poster was a former NY Fed economist who is now working as a “strategist” in the financial industry, and the post came two or three weeks after Yves had noted that there seemed to be an organized attempt to rehabilitate Geithner’s reputation.

    Again, I can not know if any particular post is an effort to surreptitiously influence the debate. But when a certain argument is repeated and/or appears at a certain time, it warrants some suspicion. The financial industry is spending many millions of dollars to defeat reform. With the huge resources at their disposal, it is logical that they make some effort to counter critics in the blogosphere.

    Cross-posted on Baseline Scenario, Naked Capitalism, and Calculated Risk

    1. sgt_doom

      Great comments and remarks, Jackrabbit!!!

      “While Goldman benefited from the subprime meltdown, it didn’t cause it.”

      It’s interesting that the above, along with the incredible notion that a minor percentage of residential foreclosures precipitated a global econ meltdown are common Talking Points of Deception.

      Obviously, only those arithmetically-challenged could possibly fantasize such things could occur, and only abject ignorance of EVERYTHING would allow one to side with Goldman Sachs (although I suspect it was another comm center on the US Chamber of Commerce payroll).

      Since Goldman Sachs, Morgan Stanley, JPMorgan Chase have been the top three (along with the Usual Suspects) in pushing for the widespread soption of credit derivatives, public-private partnerships, and a host of similar financial constructs of the layered-securitization structures, to allow for layered-speculation, etc., it is with great difficulty anyone could possibly swallow such propaganda.

      One need only refer such lowbrows (although again I suspect we are all wasting our unpaid for time on these paid-for comments from N.A.M. and the USCC call centers) to the Derivatives Policy Group (and its makeup), the Group of Thirty report on derivatives back in the ’90s, and JPMorgan Chase’s fabulous report in the early ’90s (Glass-Steagall: Overdue for Repeal), to suggest a rather obvious pattern (along with an encyclopedia of other items to voluminous to mention here).

      Salud!

  16. ray l love

    The 2 lowest-income groups are each different than any of the other groups because the low end of the labor market is constantly gaining new participants who are entering the workforce in much larger numbers than any other group. This occurs mostly as those who stop going to school, whether by graduating from high-school or by dropping out, displace those who are eligible for unemployment benefits. This puts an influx of potential workers who are not eligible for unemployment insurance in competition with workers who are eligible. There is then a motivational factor in a part of the job market which has a very high turnover rate to begin with, most of these jobs being exploitive as well, and many of them also being seasonal or temporary as part of the employers ‘flexibility’, but, that said, there are 2 basic factors that need to considered if the current unemployment situation is to be compared to that of the Great Depression.

    1) In 1930 about 25% of the population was employed in the agricultural sector and there had been a depression in that sector underway since 1921. So there were a great many more people who were destitute but not being counted as ‘unemployed’… than what there are now. A significant number of those who are currently coming out of high-school and not being counted as unemployed exist now as well, but during the Great Depression a much larger number of people were simply ‘living off of the land’ and not being added to the unemployment roles.

    2) During the Great Depression the military did not absorb nearly as large of a percentage of the population as it does now. It is in fact conceivable that without so many people coming out of high-school and joining the military the unemployment rate for the two lowest income groups may now be at Great Depression levels.

    As for the current low unemployment rates among the higher income groups. The stimulus money-trails leading to the financial services sector, and to the vastly larger percentage of the population that is now employed by all of the various government agencies and supported enterprises, whether directly or otherwise, explains that, for the most part. Or it could just be said that we live in a corrupt society, to keep it simple.

    Ray L Love

  17. steveb

    I read the original paper and wonder if it is correct. They apparently examined whether people at various income levels were fully employed. But if a person earning 80 to 100 thousand in 2008 loses their job, or is forced to accept a lower income, and earns 40 to 50 thousand in 2009, then they would be recorded, according to this survey, as earning the lower amount. So the low percentage of unemployed or partially employed with incomes above 100 thousand may not prove anything. And if young people coming out of college can’t find good jobs anymore, that would also not show up in their statistic.

    1. Kelli K

      I think you (and others who question whether the data means what it seems) are correct. In my family our main breadearner was in the over 150k category in 2008, dropped to a much lower range in 09, and will edge just barely over the line in 10. How would we show up in this study?

      Unemployment in the 150+ range is well over 3 or 4 %. More to the point, a lot of people with incomes in that range are self-employed, and they don’t “lose” their jobs, just income. My friends with mom and pop consultancies and service businesses had their incomes cut in half or more over the past two years.

      I do not deny (nor do I wish to minimize) that the poor and working class fared much worse than the higher end of the spectrum in this downturn. But the high end has taken quite a hit. The only groups unscathed in this market have been public sector workers and TBTF bankers/traders. Hopefully this will soon change–for all of us.

  18. sgt_doom

    “..a recent study by Northwestern University’s Center for Labor Market Studies…”

    That’s Northeastern University (please give credit where credit is due), maestro!

    Excellent post, your excellency.

    Of course, ignoring the present day mechanics, and referring to recent history, it is the end result of Supply-Side Economics: while increasing productivity (Supply) and decreasing wages and the wage structure (Demand — and since it was during the George H.W. Bush administration where they decoupled the minimum wage from productivity measurement, that’s pertinent to the discussion), it was necessary to further the transfer and concentration of wealth to the top portion of the upper 1%, that Demand group — or “consumer base” or “target market” had to be expanded, hence globalization.

    The resulting mantra: Globalization – Privatization – Securitization.

    The rest, of course, we are now experiencing.

    And please, enough about Arianna, she is a meta-tool, with her censorship is rule one and any mention of certain – and the most important – subjects is strictly verboten.

    The proper term for her is: misdirector (and one of many).

    Many still cannot grasp what Kevin Trudeau interestingly mentioned on his radio show the other day: absolute corruption (he was referring back to Serpico’s unraveling and exposing the complete and total corruption of the NYC police department back in the ’70s — I’d almost forgotten that noble event).

    Today, the US congress is 100% corrupt (sure, there many be several who aren’t, but too few to count statistically), and one can only hear the excuse “..the regulators weren’t paying any attention…” and that most curiously and incredibly timed news “leak” on the SEC’s viewing extravangances at work soooo many times before the obviousness of it all sinks in.

    And how many innocents have now been killed by US imperialism under the excuse “bad intel”????

    Evil is as evil does….

  19. Jerry

    Well….I work at a state unemployment office and I can tell you it is getting welllll….if you don’t mind hearing grown women cry, I’ll give you my seat…..and I think the government is up to something….this last legislation was difficult to pass, was NOT retroactive, and there is talk of reducing the amounts paid out per person….after a fairyland jobs bill…I thought the jobs bill was just a front runner for dumping unemployment benefits…maybe that’s the next one….

  20. Monty Hall

    Interesting analysis as the poor are suffering from depression level unemployment and soon they will be suffering from hyperinflation level on basic need products.

    Its the worst case scenario for those linked to real economy jobs that dont get bonus pools of more than 5bn USD in just 3 months…

    The great Helicopter Ben paving his way through history…

  21. wally

    The $150,000+ people are the ones who sent the low paying jobs overseas. Now they have to live in the country they have shaped. It looks OK for them for a while, but when the fact becomes clear that there will NEVER be jobs for the lower-paid, it might get nasty.

    1. splashy

      That’s the thing I have been wondering about, Wally. The Tea Partiers are more wealthy, so they are all about taxes and the other things that the wealthy are always so concerned about.

      What I want to know is what is going to happen when all those unemployed people start really getting PO’d at what has happened, done to them by the wealthy? IMHO that is why they keep extending unemployment – to protect the wealthy from the desperate. There are many that are not getting unemployment, but are hanging on because other are getting it. If it stops, there will be lots more than those that lose their unemployment benefits that will start hurting.

      The wealthy will have to live in prisons of their own making. Gilded cages.

  22. purple

    As Dean Baker often points out, the professional classes have had their jobs protected while the working classes have had theirs dismantled under ‘free trade’.

    The problem is, there are smart people everywhere, so there is no reason for the preservation of professional jobs either. If one follows the same logic.

    On the farm, it’s called eating your seed corn.

  23. recaldo

    although this is under the wrong thread, I find it quite funny that Goldman claims to have lost money, net, on RMS, even though they got 12 billion from the government because of their CDS positions with AIG on some of those securities. How can congress not figure that out?

  24. earnyermoney

    “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.”

    Nice try Arianna. The reason for overlooking the plight of the poor is ORahmaRod. If John McCain were in the White House, you’d receive daily stories on this issue. Instead we get “Americas Back” and “The Big Banks are back” … as ORahmaRod cranks up the heat on Wall Street as a shakedown for campaign cash.

  25. mario

    31 percent is not sirprising at all. Actually it could even get higher. The technology is replacing labor for decades. I think it would be socially responsible to reduce 40 hours per week to at least 35 so more folks would have a job.

  26. Anonymous Jones

    For many of the reasons cited above, I think this study is mostly nonsense.

    That said, on a purely anecdotal level, I have been on a mini-hiring spree here in LA, and I cannot believe the resumes that pass my desk. People with graduate degrees begging for a $35k admin position. It is stunning. I’ve posted ads on Craigslist and had 100 resumes and cover letters emailed to my hiring person within 2 hours, almost all from competent, experienced people willing to take a cut in pay from their last job (and obviously trying desperately to get a job as evidenced by the trolling of Craigslist and immediately sending resumes and cover letters to a small business they have never before heard of).

    At the same time, I can’t get a decent reservation at the restaurants I like. The bars I frequent are packed to the gills at 10:30pm almost every night and people are spending $10-$15 a drink. I don’t want to get all ‘John Edwards’ here, but I never experienced the idea of Two Americas as much as I have in the last 12 months. Yes, it’s a different Two Americas than Edwards was strictly discussing, but it really has affected me. I know I’m often condescending and that this fact I’m about to share is probably more evidence of my superiority complex, but it makes me physically sick to my stomach to watch hard-working, educated people have to beg for a job that must have seemed well beneath them just two years ago. I prefer to think of it as empathy, but you can scoff as you like.

  27. NoMercy

    Lets be honest … the Rich are getting Richer alot faster with the advent of the internet… All countries have a big problem ahead in taking care of the less fortunate … simply sticking your head in the sand or claiming that these people need to get a job does not cut it….and throwing the less fortunate in jail does not work either … we need to revamp our crappy education sysytem.

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