The Current State of Unemployment
The Feds recently announced 6.1% unemployment. The rate is the lowest it has been since the Great Recession and is being toted as a triumph for the Obama Administration, which has been working to drive down unemployment rates since 2009. But there is more to the current state of unemployment than just this statistic.
While a mere 6.1% unemployment rate might paint a glossy economic picture, the reality is much harsher. A record 92.5 million people are out of the workforce, underemployment is rampant, the cost of gas and food are at all-time sustained highs while wages have stagnated, and the failure to extend federal unemployment insurance benefits has had a downward effect on the unemployment rate, making it look better than it actually is.
Furthermore, while the Obama Administration has managed to create jobs, most of the jobs created aren’t in high-paying sectors. So what’s the real story behind the latest federal unemployment numbers? Let’s take a look.
A significant portion of jobs created in the post-recession recovery are “low paying” jobs
A 2013 National Employment Law Project study estimated that roughly three out of five jobs created since the recession are low-paying, defined as those paying 80 percent or less of the average private-sector wage of $20.04 per hour.
That number is roughly the equivalent of the number of middle-income jobs lost during the recession. In other words, these middle-income jobs that were lost during the recession are being replaced with low-income jobs that don’t necessarily pay the bills.
According the Working Poor Families Project, approximately 47 million people, or roughly one third of working families in the US, are stuck in low wage jobs.
The bottom line? Yes, job are being created. But the jobs being created are pretty lousy and the majority of them don’t pay a living wage. With the gap between the rich and the poor widening, this kind of job creation is only exacerbating the polarization of America’s socioeconomic landscape.
Underemployment is a huge issue
Many of employed American workers are actually underemployed. Underemployment is defined as working a job requiring a lower level of education or skills than what the worker is qualified for. The United State’s underemployment crisis is bad—and by all accounts it is only getting worse.
An average of 150,000 new college graduates enter the workforce each month, creating far more highly-qualified job seekers than there are high-paying jobs.
In fact, a 2013 study by the Center for College Affordability and Productivity (CCAP) predicted that the number of college graduates entering the workforce each year will be more than double the number of jobs available that require at least a Bachelor's degree.
Furthermore, CCAP analysis shows that only four of the fastest growing occupations require a college degree.
The result? Educated workers, many of which are saddled with student-loan debt, are getting stuck in minimum wage jobs.
The jobless are leaving the workforce altogether
The 6.1% unemployment rate only counts those who are considered to be in the workforce, meaning it only considers those who are actively looking for work to be unemployed.
In other words, it doesn’t reflect those who have stopped looking for work altogether — if it did include these “missing” workers, unemployment would be over 10%. Part of the reason unemployment is dropping is because workers having stopped actively looking for work, feeling that they will never be able to find employment.
Wages have stagnated
Since 2000 productivity has risen 23% but wage growth for the average American has hovered around 2% annually, barely keeping pace with inflation.
Furthermore, wages have fallen to a record low as a share of America’s gross domestic product. Until 1975, wages have virtually always comprised more than 50 percent of the nation’s G.D.P. Since 2001, when the wage share was 49%, there has been a steep slide. Last year wages fell to a record low of 43.5%.
All in all, median income for working-age households slid 12.4% from 2000 to 2011. And while wages are stagnating, corporate profits have climbed to an all time high.
Just because people are working doesn’t mean they aren’t still struggling
The unemployment rate isn’t necessarily a good indicator of overall economic prosperity. Almost one in three working US families struggle to meet basic needs. People might have jobs, but many of those who are working still can’t afford to put food on the table.
*IMPORTANT: Be sure to check with your State for details on your full eligibility requirements, or to begin the voluntary benefits process.