Recession Hammers Low-Wage Workers, but Glances Off the Affluent

A new report on the impact of unemployment and underemployment during the Great Recession suggests that higher-paid workers have enjoyed practically full employment during the worst economic conditions in 80 years, while the lowest-paid workers have suffered through an unemployment rate above 30%.The dismal findings are contained in a study by Andrew Sum, Ishwar Khatiwada and Sheila Palma of the Center for Labor Market Studies at Northeastern University, which details the unemployment and underemployment rates of workers in 10 different income categories during the period of October to December 2009.

The report says those in the lowest income group (making $12,499 or less) and the second-lowest group (making $12,500 to $20,000) account for 30.8% and 19.1%, respectively, of those unemployed during the fourth quarter of 2009. They also accounted for 20.7 and 17.2% of those who were underemployed. By contrast, those making $100,000 to $149,000 or $150,000 or more accounted for 4% and 3.2% of the unemployed, respectively, and 2.5% and 1.6%, respectively. of the underemployed.

The middle class was also hit hard during the recession, but those with the highest incomes weren't affected as seriously.

"Radically Different Labor Markets"

"At the end of calendar year 2009, as the national economy was recovering from the recession of 2007-2009, workers in different segments of the income distribution clearly found themselves in radically different labor market conditions," says the report. "A true labor market depression faced those in the bottom two deciles of the income distribution, a deep labor market recession prevailed among those in the middle of the distribution, and close to a full employment environment prevailed at the top. There was no labor market recession for America's affluent."

New York Times columnist Bob Herbert wrote about the report on Tuesday, pointing out how the pain of this recession has affected those who were in the most pain before it started. "Those in the lower income groups are in a much, much deeper hole than the general commentary on the recession would lead people to believe," he wrote.

The Northeastern study also says employed workers in the lower-income groups are 13 times more likely to be underemployed than are employed workers in the top income categories. Members of lower-income groups were also most likely to have either withdrawn from the active labor pool or to have chosen not to enter the depressed labor market in the fourth quarter of 2009 to seek paid employment.
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