Mass Underemployment

Hidden behind Massachusetts’s relatively good unemployment rate of 6.8%, economists say underemployment is a big problem. One analysis finds Massachusetts is the worst in the nation, with 8.9% of currently employed people with bachelor degrees or higher now working in jobs at least one educational level below where they should be.

A non-scientific poll of 995 people in Massachusetts confirmed that 40% of workers over 50 years old were not working at their peak capacity.

Don Seiffert, Boston Business Journal, February 24 – March 1, 2012

Can you find the missing workers?

Chicago, view from the Hancock Tower

Missing: 5.4 million workers

Millions of Americans vanished from the U.S. labor force in the past three years, many of them do discouraged by long, fruitless job searches that thy have given up looking for work, convinced that no employer wants them.

The “hidden unemployed” are not counted in the official jobless rate, tracked by the Center for Labor Market Studies at Northeastern University. They estimate the number to be 5.4 million people, with over 120,000 in Massachusetts. Half of the missing workers are under the age of 35.

Among the missing are teenagers and laid off 60-year-olds. Some are in college or training programs. Many have ended up homeless. Although the official unemployment rate slipped to 8.3% in January, when the labor force dropouts and the underemployed – those working part-time because they can’t find full-time jobs – are included, the rate doubles to 17%.

Katie Johnston, The Boston Globe, February 1, 2012

Confidence retreats in January

Consumer confidence fell in January after two straight months of gains as Americans become more worried about their incomes, rising gas prices, how hard it is to find a job, and overall business conditions. Things haven’t gotten much better in 2012. 

Americans have reasons to be cautious in their optimism as the jobless rate is still high at 8.5% although it is at the lowest level in nearly three years. Consumers are worried about a weak housing market, inflation and that incomes are not keeping pace with inflation, causing shoppers cut back on big purchases. 

Associated Press, The Boston Globe, February 1, 2012

Nearly one-third of middle class suffer downward mobility

Tami Luhby of CNNMoney.com wrote in January 12, 2012:

Nearly one third of Americans who were raised in the middle class dropped down the economic ladder as adults -- and that's before the Great Recession hit. Pew looked at children born in the early- to mid-1960s and assessed their economic status roughly 40 years later.

Being middle class in the parents' generation meant a household income of roughly $33,000 to $64,000 in 1979. But their children had to earn between $54,000 and $111,000 to maintain their relative standing in society in the mid-2000s. (These figures are adjusted for inflation.)

The middle class is defined as those between the 30th and 70th income percentile.

Things have only gotten worse in recent years. The Great Recession has likely made it harder for many people to remain in the middle class, experts said.

Long-term unemployment has devastated the ranks of the middle class, with many people losing their homes and forced to turn to food banks and government aid after they run through their savings. It takes nearly 41 weeks, on average, for the jobless to find new work. Also, the steep decline in home values has hurt many in the middle class.

Young adults may find it particularly difficult to hold onto their parents' middle class status. That's because they are having a much harder time landing jobs, particularly well-paying positions in their field. The unemployment rate for 20- to 24-year-olds was 14.4% in December, compared to the national 8.5% rate.

This could hurt their earning potential for decades to come, which has earned them the nickname "The Lost Generation."

http://money.cnn.com/2012/01/11/news/economy/middle_class_mobility/index.htm

Where is the American Dream today?

On November 16, 2011, Tiziana Dearing, CEO of Boston Rising, questions whether or not the American Dream is still alive.

Post-recovery is taking longer than the past. From 1945 to 1990 it took on average six months for jobs to return to their pre-recession levels. In the recession of the early 1990s, it took fifteen months. In the early 2000s, it took 39 months. Today we are on track for jobs to come back 60 months (five years) after the economy has recovered.

According to the Brookings Institute, the poor in the U.S. grew to an historic high of 46.2 million, and in extreme-poverty neighborhoods, where at least 40% of individuals live below the poverty line, the population rose by one-third from 2000 to 2005-09. The American Dream is receding. Americans are no longer dreaming the same Dream.

http://www.huffingtonpost.com/tiziana-dearing/us-wealth-gap_b_1093582.html

Amid unemployment and inequality, is the American Dream at risk?

On October 26, 2011, Zachary Ross, The Lookout, wrote about the economic results of the Great Recession on the Future of the American Dream. Zachary writes:

For well over a century, the American Dream has acted as a beacon of hope to people around the world: the notion that by working hard and playing by the rules, anyone can build a secure, comfortable life for themselves and a bright future for their kids. But as the country struggles to shake off the Great Recession, amid persistent joblessness and growing inequality, is that idea at risk?

In May, a Pew poll found that just 47 percent of Americans think their kids will enjoy a higher standard of living as adults than they themselves do. As recently as 2009--the height of the economic downturn--that number was 62 percent.

This growing pessimism isn't hard to explain. Fourteen million Americans are officially unemployed, and the number spikes to around 26 million if you count people who have grown discouraged and given up looking for work. The average duration of joblessness is now at a record nine months. Meanwhile, GDP growth has been limping along since the official end of the recession over two years ago.

The young have been especially hard hit. Unemployment for Americans in their 20s has skyrocketed in recent years. And a growing number are moving in with their parents as they struggle to make ends meet.

At the same time, Americans have also been debating the thorny question of inequality--an issue spotlighted lately by the Occupy movement. A CBO report released Tuesday--just the latest in a series of studies to confirm the massive rich-poor gap--found that income for the wealthiest one percent of Americans had exploded since 1979, by a whopping 275 percent. Meanwhile, income for the poorest 20 percent grew by just 18 percent in the same period.

But the heart of the American Dream has always been about mobility. As long as people feel they have a fair shot at building a better life, they've usually been able to put up with periods of economic turmoil, even with relatively high levels of inequality.

Of course, concerns about the flickering of the American Dream are hardly new. Back in the recession of the early 90s, Generation Xers graduating from college were told they'd struggle to do better than their parents had--a prediction that wasn't borne out.

But this time may be different. Economists say that even once growth gets back to normal--whenever that may be--employment will likely come back lower than we've grown used to, thanks in part to increasing offshoring of jobs and automation. And our political system appears even more dysfunctional than it did even back then.

"It's time to reclaim the American Dream," then-Sen. Barack Obama declared back in 2007. At this point, it looks like we've got a long way to go.

http://news.yahoo.com/blogs/lookout/amid-unemployment-inequality-american-dream-risk-200141836.html