Earlier in my post on US Unemployment Reaching a 26-Year High, I said this about the U-6:
Among all groups, the U6 underemployment rate -- a broader measure of the jobs shortfall which includes people whose hours have been cut, those working part-time for lack of full-time work, and those who have given up looking -- is 17.5 percent. This is the number that I prefer to use as the real unemployment number. This reflects those individuals who can no longer find work in their chosen careers and have instead been forced back to school or to take lower paying jobs in the service sector. The lack of manufacturing jobs and a collapse in even high-paying white collar sectors such as finance and legal services poses a particular worry for the US economy and ultimately for the Administration.
David Leonhardt of the New York Times has some more color on our serious underemployment problem. Here are some of the lowlights:
In all, more than one out of every six workers -- 17.5 percent -- were unemployed or underemployed in October. The previous recorded high was 17.1 percent, in December 1982.This includes the officially unemployed, who have looked for work in the last four weeks. It also includes discouraged workers, who have looked in the past year, as well as millions of part-time workers who want to be working full time.
The rate is highest today, sometimes 20 percent, in states that had big housing bubbles, like California and Arizona, or that have large manufacturing sectors, like Michigan, Ohio, Oregon, Rhode Island and South Carolina.
The new benchmark is a sign of just how much damage financial crises tend to inflict. A recent book by Carmen M. Reinhart and Kenneth S. Rogoff, two economists, found that over the last century the typical crisis had caused the jobless rate in the country where it occurred to rise for almost five years. By that standard, the jobless rate here would continue rising for two more years, through the end of 2011.
Officially, the Labor Department's broad measure of unemployment goes back only to 1994. But early this year, with the help of economists at the department, The New York Times created a version that estimates it going back to 1970. If such a measure were available for the Depression, it probably would have exceeded 30 percent.
Here's more and it is somewhat paradoxical.
One of the more striking aspects of the Great Recession is that most of its impact has fallen on a relatively narrow group of workers. This is evident primarily in two ways.First, the number of people who have experienced any unemployment is surprisingly low, given the severity of the recession. The pace of layoffs has increased, but the peak layoff rate this year was the same as it was during the 2001 recession, which was a fairly mild downturn. The main reason that the unemployment rate has soared is the hiring rate has plummeted.
So fewer workers than might be expected have lost their jobs. But those without work are paying a steep price, because finding a new job is extremely difficult.
Second, wages have continued to rise for most people who still have jobs. The average hourly wage for rank-and-file workers, who make up about four-fifths of the work force, actually accelerated in October, according to the new report.
Even though some companies have cut the pay of workers, the average hourly wage has still risen 1.5 to 2.5 percent over the last year, depending on which government survey is examined. Average weekly pay has risen less -- zero to 1 percent -- because hours have been cut. But average prices have fallen. Altogether, the typical worker has received a 1 to 2 percent inflation-adjusted raise over the last year.
In the other two severe recessions in recent decades, workers with jobs fared considerably worse. At the same point in the mid-1970s downturn, real weekly pay had fallen 7 percent; in the early 1980s recession, it had fallen 4 percent.
It is a strange combination: workers who still have a job are doing better than in other deep recessions, but the unemployment and underemployment have risen to their highest level since the Depression.
As I noted in my earlier the long-term unemployment rate remains troubling and suggests a continuing structural imbalance. The average length of unemployment reached 26.9 weeks, a record. This is consistent with a plummeted hiring rate.
|
|
|
Permalink :: 8 Comments :: Post a Comment
|
In order to post a comment, you must be logged in. If you have a member account, please log in to comment.
If not, you can make an account right here. It's quick and free.
