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Saturday, June 06, 2009

Uneven Unemployment Rates

Stratified unemployment rates reveal substantial differences by race, gender, education, and occupation:

16.4%, by Richard Florida: That’s the overall rate of unemployment, according to the Bureau of Labor Statistics’ newly released U-6 measure which includes “marginally attached workers” as well as those who work part-time for economic reasons. That’s quite a bit higher than the widely reported 9.4 percent figure...

And, unemployment continues to fall unevenly by gender, race, class, and occupation.

Race: The unemployment rate for whites was 8.6 percent compared to 12.7 percent for Hispanics, 14.9 percent for blacks, and 16.8 percent for black men.

Gender: Men continue to experience higher rates of unemployment than women, with the gap widening to three full percentage points - 10.5 percent vs. 7.5 percent (for those over 16 years of age) - due to the concentration of men in manufacturing jobs.

Human Capital/Education: Unemployment is even more uneven by education or human capital level. The unemployment rate for college graduates is 4.8 percent, half that for high school (only) graduates (10 percent), and one-third of the 15.5 percent rate facing those without a high school diploma.

Class: And there remain huge differences in unemployment by occupation. The highest rates of unemployment remain concentrated in working class occupations. For production, transportation, and moving occupations overall, the rate is 13.7 percent, up from 6.3 percent last year. For production workers it’s 15.6 percent; movers and transportation workers, 11.8 percent; and construction and extraction jobs, 19.7 percent. For service occupations, the unemployment rate is nearly 10 (9.4) percent.

Unemployment is significantly lower for the creative class. For management and business occupations - including hard-fit financial jobs - overall the unemployment rate is 4.6 percent, up from 2.7 percent last year; and for professional and technical occupations it is 4.2 percent, up from 2.5 percent a year ago.

I suppose the financial innovation that led to the crisis can be termed "creative," but the social utility of the products that were created is doubtful. People outside of the financial sector are paying a high cost for that creativity, and that inequity is one reason to support social insurance and other programs that dampen the effects of the financial meltdown. In that regard, here's Brad DeLong:

Fiscal Policy in the Second Half of 2009: A DRAFT of a letter I might send next week:

Dear President Obama--

At the end of 2008, when your incoming administration was preparing your recession-fighting strategy, your forecasts were that the recession would bottom out in August of 2009, with a peak unemployment rate of 7.9%. The unemployment rate in May was already 9.4%. 10% unemployment this year is a nearly foregone conclusion. 11% unemployment--a recession twice as deep as the one your incoming administration was forecasting at the end of 2008--is not unlikely.

An 11% unemployment rate would carry along with it an underemployment rate--a U-6--that would kiss 20%.

Even had the fiscal expansion plans of your administration not been cut back by roughly a quarter in their employment-generating effectiveness by the Congress, fiscal stimulus plans that appeared to be adequate and appropriate at the turn of the year now appear to be inadequate.

Compounding the problem of inadequate fiscal expansion at the federal level is the problem of inappropriate and substantial fiscal contraction at the state level. Last fall Nobel Prize-winning Princeton economist Paul Krugman feared "fifty Herbert Hoovers"--fifty states each trying to balance its budget year-by-year and each one delivering a substantial drag on employment and income in its and its neighbors' economies.

I therefore believe:

  • That it is past time for you to seek from the Congress for authority to guarantee the debt of states that, in response to the current recession, (a) seek to conduct their own state-level fiscal expansions, and (b) devise plans and strategies for the long-term repayment of the debt the federal government guarantees that the Secretary of the Treasury certifies as prudent and sustainable.
  • That it is time for you to seek from the Congress an amended Budget Resolution: to include in this year's forthcoming Reconciliation process an additional $500 billion of federal aid to states, distributed per capita and conditioned on their maintaining effort at the provision of public services--on their not repeating the mistake of Herbert Hoover of cutting government employment and spending in a downturn.

Sincerely yours,

J. Bradford DeLong

    Posted by on Saturday, June 6, 2009 at 11:17 AM in Economics, Unemployment | Permalink  TrackBack (0)  Comments (36)


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