Unemployment Is Not Distributed Evening Across Income Levels – No One Thought It Was

Ten or so days ago I ran across several citings of a report issued that revealed that those at the lower income levels are economically suffering at a disproportionate level than those at the higher income levels. I pulled up the report titled Labor Underutilization Problem of US Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent and noticed that it is written by the same group of people that did the analysis I used for a couple of wealth distribution entries I wrote in April of 2009. I respect their research and many of the their findings.

However, this paper seems to be a little high on dramatics. For instance, the research shows that those with an income level of $12,499 or less has an unemployment rate of 30.8% and an underemployment rate of 20.7% (over 50% of this population pool is not employed at a full level). Those with an income level between $12,500 and $20,000 have numbers of 19.1% and 17.2% respectively. The point of the paper is to show that as income levels increase unemployment and underemployment levels drop to practically full employment levels (those with an income of $150,000 or more have numbers of 3.2% and 1.6%). These are WOW numbers.

But I’m left with several questions. The first is what are the relative numbers during good or normal times anyway, meaning, are those at the bottom always unemployed at a factor of 10 (30.8% to 3.2%)? If not, at what rate is that factor increasing/decreasing? Also, what are the upper and lower normal limits to these numbers historically? I suspect that those at the lower income levels have fluctuations that spike as business cycles come and go. Finally, are these numbers a forecast for what it means to be a knowledge economy? It looks like we are moving to a resort town of society – those that own the hotels and those that clean the rooms. The middle class are the tourists, except in this case they are Chinese?

Working Thoughts 02/23/09
Trade Up to the Future


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