U.S. Unemployment Varies Significantly Based on Income Levels

The U.S. official unemployment rate was 9.7% in January, 2010. The number of unemployed persons in the country stood at 14.8 million.

The distribution of unemployment among the major worker groups:

Whites= 8.7%
Blacks = 16.5%
Hispanics =  12.6%
Asians= 8.4%
Adult Men=  10%
Adult Women = 7.9%
Teenagers= 26.4%

While the above distribution gives us some indication of unemployment rates among various groups it does not tell us how income levels affect unemployment. For example, it does not tell us which group of workers are the most and least affected.

A recent research paper from Center for Labor Market Studies,Northeastern University, Boston, Massachusetts analyzed the unemployment issue from an income level perspective using the fourth quarter 2009 data . The study showed that jobs losses disproportionally affected American workers.

Charts:

US-Unemployment-Rates-by-Income-Levels

us-ur-declies.JPG

Source: Labor Underutilization Problems of U.S. 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

By Andrew Sum, Ishwar Khatiwada, With the Assistance of Sheila Palma, Center for Labor Market Studies,Northeastern University, Boston, Massachusetts

The following are some of the key takeaways from the study:

The study above clearly shows that lower-income Americans are affected greatly by the current recession while people at the top of the pyramid have almost negligible unemployment rates. Since the majority of the low-income workers are employed in the service sector, they face a further bleak future as consumer spending is still down. The study confirms that the headline rate unemployment rate of 9.7% is vastly misleading since it is much worse than that for low-income workers. Most of the Wall-Street bankers, government employees and other professionals have escaped this recession unscathed while it is not the same case with the rest of the workers.

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