Employment gap between rich, poor widest on record

Associated Press photo by ERIC GAY -- Annette Guerra 33, of San Antonio, has been looking for a full-time job for more than a year after finishing nursing school. By HOPE YEN Associated Press WASHINGTON The gap in employment rates between Americas highest- and lowest-income families has stretched to its widest levels since officials began tracking the data a decade ago, according to an analysis of government data conducted for The Associated Press. Rates of unemployment for the lowestincome families those earning less than $20,000 have topped 21 percent, nearly matching the rate for all workers during the 1930s Great Depression. U.S. households with income of more than $150,000 a year have an unemployment rate of 3.2 percent, a level traditionally defined as full employment. At the same time, middleincome workers are increasingly pushed into lower-wage jobs. Many of them in turn are displacing lower-skilled, lowincome workers, who become unemployed or are forced to work fewer hours, the analysis shows. This was no equal opportunity recession or an equal opportunity recovery, said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University. One part of America is in depression, while another part is in full employment. The findings follow the governments tepid jobs report this month that showed a steep decline in the share of Americans working or looking for work. On Monday, President Barack Obama stressed the need to address widening inequality after decades of a winnertake-all economy, where a few do better and better and better, while everybody else just treads water or loses ground. We have to make the investments necessary to attract good jobs that pay good wages and offer high standards of living, he said. While the link between income and joblessness may seem apparent, the data are the first to establish how this factor has contributed to the erosion of the middle class, a traditional strength of the U.S. economy. Based on employment-to-population ratios, which are seen as a reliable gauge of the labor market, the employment disparity between rich and poor households remains at the highest levels in more than a decade, the period for which comparable data are available. Its pretty frustrating, said Annette Guerra, 33, of San Antonio, who has been looking for a full-time job since she finished nursing school more than a year ago. During her search, she found that employers had become increasingly picky about an applicants qualifications in the tight job market, often turning her away because she lacked previous nursing experience or because she wasnt certified in more areas. Guerra said she now gets by doing odds and ends jobs such as a pastry chef, bringing in $500 to $1,000 a month, but she says daily living can be challenging as she cares for her mother, who has end-stage kidney disease. For those trying to get ahead, there should be some help from government or companies to boost the economy and provide people with the necessary job training, said Guerra, who hasnt ruled out returning to college to get a business degree once her financial situation is more stable. Im optimistic that things will start to look up, but its hard. Last year the average length of unemployment for U.S. workers reached 39.5 weeks, the highest level since World War II. The duration of unemployment has since edged lower to 36.5 weeks based on data from January to July, still relatively high historically. Economists call this a bumping down or crowding out in the labor market, a domino effect that pushes out lowerincome workers, pushes median income downward and contributes to income inequality. Because many mid-skill jobs are being lost to globalization and automation, recent U.S. growth in lowwage jobs has not come fast enough to absorb displaced workers at the bottom.

Low-wage workers are now older and better educated than ever, with especially large jumps in those with at least some college-level training. The people at the bottom are going to be continually squeezed, and I dont see this ending anytime soon, Harvard economist Richard Freeman said. If the economy were growing enough or unions were stronger, it would be possible for the less educated to do better and for the lower income to improve. But in our current world, where we are still adjusting to globalization, that is not very likely to happen. The figures are based on an analysis of the Census Bureaus Current Population Survey by Sum and Northeastern University economist Ishwar Khatiwada. They are supplemented with material from the Massachusetts Institute of Technologys David Autor, an economics professor known for his research on the disappearance of midskill positions, as well as John Schmitt, a senior economist at the Center for Economic and Policy Research, a Washington think tank. Mark Rank, a professor at Washington University in St. Louis, analyzed data on poverty.

The overall rise in both the unemployment rate and low-wage jobs due to the recent recession accounts for the record number of people who were stuck in poverty in 2011: 46.2 million, or 15 percent of the population. When the Census Bureau releases new 2012 poverty figures on Tuesday, most experts believe the numbers will show only slight improvement, if any, due to the slow pace of the recovery. Overall, more than 16 percent of adults ages 16 and older are now underutilized in the labor market that is, they are unemployed, underemployed in part-time jobs when full-time work is desired or among the hidden unemployed who are not actively job hunting but express a desire for immediate work. Among households making less than $20,000 a year, the share of underutilized workers jumps to about 40 percent. For those in the $20,000-to$39,999 category, its just over 21 percent and about 15 percent for those earning $40,000 to $59,999. At the top of the scale, underutilization affects just 7.2 percent of those in households earning more than $150,000.

By race and ethnicity, black workers in households earning less than $20,000 were the most likely to be underutilized, at 48.4 percent. Low-income Hispanics and white workers were almost equally as likely to be underutilized, at 38 percent and 36.8 percent, respectively, compared with 31.8 percent for lowincome Asian-Americans. Loss of jobs in the recent recession has hit younger, less-educated workers especially hard. Fewer teenagers are taking on low-wage jobs as older adults pushed out of disappearing mid-skill jobs, such as bank teller or administrative assistant, move down the ladder. Recent analysis by the Associated PressNORC Center for Public Affairs Research shows that white and older workers are more pessimistic about their opportunities to advance compared with other groups in the lower-wage workforce. Associated Press writer Tom Raum, Director of Polling Jennifer Agiesta and News Survey Specialist Dennis Junius contributed to this report.

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