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:

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 total number of unemployed and underemployed has doubled in the last two years
• Four year college graduates, many managers, government employees,  professionals are well protected from job losses
• Blue-collar workers particularly in the construction sector, teenagers and black men have higher unemployment rates
• From the chart above, we  can infer that workers in the top two deciles have unemployment rates of just 4.0% and 3.2%
• Workers in the lowest decile – those earning $12,499 or less – faced a Great Depression era unemployment rate of about 31% and the second lowest declie had an unemployment rate of about 20%
• Both Unemployment and Underemployment rates increase dramatically from high income to low income levels

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.

A new report from Silicon Valley nonprofit groups Joint Venture: Silicon Valley Network and Silicon Valley Community Foundation casts doubt on the future prosperity of the region and mentions that the valley’s innovation engine is at risk.

From a news report:

“Silicon Valley’s innovation engine has driven the region’s prosperity for 60 years, but at the moment we’re stalled,” said Russell Hancock, CEO of Joint Venture, in a statement. “What’s hard to say is whether we’re stuck in neutral, which has happened before, or whether it’s time now for a complete overhaul.”

Like the rest of California, the region has taken a serious hit during the recession. According to the “2010 Silicon Valley Index,” Silicon Valley lost more than 90,000 jobs since 2008, commercial vacancy rates jumped 33 percent, and more than 14,000 homes were foreclosed on.

Moreover, the region’s companies aren’t able to attract the same numbers of talented foreign workers, which it called Silicon Valley’s “lifeblood,” according to the report. And the number of foreign students receiving degrees stateside in science and engineering has been steadily declining since 2003.”

While the Silicon Valley and other regions of high tech innovation in the U.S. are struggling, start-ups are  flourishing in Israel. In the past few decades Israel has become a leader in the hi-tech field. According to some estimates, Israel has a higher density of start-ups than any other country in the world. One of the main reason for this high rate of success is the amount spent on R&D by Israel.

Source: High-Tech Israel, OECD

Israel spends about 5% of its GDP on R&D, the highest among OECD countries and  more than double the OECD average of 2.3%. It is interesting to note that the U.S. lags Israel, Sweden and Japan in R&D spending.

An interesting chart from a presentation by Richard C. Koo, Chief Economist, Nomura Research Institute, Tokyo:

Click to Enlarge

Source: The Age of Balance Sheet Recessions: What Post-2008 U.S., Europe and China Can Learn from Japan 1990-2005 by Richard C. Koo, Nomura Research Institute