Unemployment Hurts More than the Unemployed
by Clyde Weiss | August 31, 2011
It’s not just the unemployed who suffer when they don’t have a job. The consequences for the overall economy are far greater, and more dire, according to a new report by Economic Policy Institute (EPI) Pres. Lawrence Mishel and EPI economist Heidi Shierholz.
The nation’s jobless rate is 9.1%. That means 13.9 million people are out of work. Add frustrated jobless workers who have given up looking for work – and those who want full-time jobs but have had to settle for part-time work – and you have an even more depressing 16.1% underemployment rate.
Most people think that unemployment affects just those who don’t have jobs, but the EPI report notes that high unemployment also hits the broader workforce “through lost wages, income and wealth, as well as higher poverty.”
The consequences of unemployment to the broader economy, according to the EPI report:
- Family incomes fell. “The median working-age household saw an income decline of $2,700 from 2007 to 2009, on the heels of one of the worst business cycles (2000-07) on record for income or employment gains. As a result, the typical working-age household brought in roughly $5,000 less in 2009 than it did in 2000.”
- Wage growth slowed. “In fact, wage growth has been slower in the last two years than at any time over the last 30 years.”
- Average wealth declined. “The bottom four-fifths of households had less wealth in 2009 ($62,900) than in 1983 ($65,300). In contrast, the wealth of the top fifth was 50% larger in 2009 than in 1983.”
- Poverty rose. “In 2009, one in seven people was living in poverty.”
What to do? Mishel and Shierholz conclude that we need to “stimulate demand, which will create jobs.” They suggest that Congress “implement programs to rejuvenate the labor market, including the repair and upgrading of the nation’s 100,000 public school buildings; direct job creation in hard-hit communities; additional spending on transportation infrastructure; fiscal relief to states; and the expansion of the safety net, which both helps those most hurt by the downturn and stimulates the economy by getting money into the hands of people who will immediately spend it.”
Those are steps that we support. AFSCME Pres. Gerald W. McEntee declared in July: “We need to plan for significant re-investment in our towns and cities” to restore America’s vitality. But right-wing members of Congress, led by tea party ideologues, want to slash spending on critical public services and infrastructure improvements. That will just make matters worse.
Read a summary of the EPI report here.
