the state of working america, 2002-03 the labor market recession, which began in october 2000...

The State of Working America, 2002-03• The labor market recession, which began in October 2000

remains with us.

• This recession marks the end of the long economic boom of the 1990s, which brought the first, broad-based increase in wages and incomes in decades.

• Low-wage workers especially benefited, as poverty rates dipped to historic lows.

• The 1990s also brought, however, substantial increases in household debt.

• The long-term trend towards increased hours of work continues and having a “working mom” remains a salient fact of American family life.

The 5.7% unemployment rate obscures the recession’s true depth

• Employment losses are steeper during this recession than in the early 1990s recession.– Higher unemployment has been more broadly

shared by education and by gender.– Long-term unemployment has increased,

especially for women workers.

• Slower wage growth is already occurring, especially among low-wage workers.– Expect to see increased inequality as a result.

Source: Mishel, Lawrence, Jared Bernstein, and Heather Boushey. 2003. The State of Working America 2002-03. Cornell University Press.

The unemployment rate and its trend, 1947-2000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

Average, 1947-67: 4.7%

Average, 1967-95: 6.4%

Average, 1995-00: 4.8%

Trend

Unemployment rate


Monthly payroll employment growth from unemployment’s low-point

over the past three recessions

96.0

97.0

98.0

99.0

100.0

101.0

102.0

103.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Mo

nth

1=

100

May 79

June 90

October 00


Percentage point change in unemployment during recession

6.0

3.2

2.0

4.6

1.9 2.1

3.3

1.92.3

1.51.0

1.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Early 1980s recession Early 1990s recession Early 2000s recession

less than a high school high school graduates some college college graduates

(1st quarter of 1980 to the 1st quarter of 1983)

(2nd quarter of 1990 to the 1st quarter of 1993)

(3rd quarter of 2000 to the 2nd quarter of 2002)


Percentage point change in unemployment during recession for men.

5.8

2.82.0

11.7

4.8

3.3

8.9

5.9

2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Early 1980s recession (May 1979-Dec 1982)

Early 1990s recession (June 1990-June 1992)

Early 2000s recession(Oct 2000-June 2002)

White

African American

Hispanic


Percentage point change in unemployment during recession: women.

3.5

1.71.4

5.0

3.53.3

5.3

2.5

3.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Early 1980s recession (May 1979-Dec 1982)

Early 1990s recession (June 1990-June 1992)

Early 2000s recession(Oct 2000-June 2002)

White

African American

Hispanic


Nominal growth in average hourly earnings, 1995-2002

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%


Nominal earnings growth for men,comparing first halves of the year

1.6%

5.1%

2.1%2.0%

5.1%

2.6%

3.4%

5.9%

3.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1995-96 1998-99 2001-02

10th Median 90th


Nominal earnings growth for women,comparing first halves of the year

3.9%

4.5%

2.7%

3.5%

2.9%

5.0%

3.9%3.7%

4.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1995-96 1998-99 2001-02

10th Median 90th

Full Employment: Love it when you've got it, miss it when it's gone…

• What is it? Close to full utilization of economic resources, including the un- and underemployed. Corresponds to unemployment rate in the neighborhood of 4%.

• Full employment led to sharp reversals in real wage and income growth; these gains were broad-based.

• Full employment is not, however, a cure-all (especially as it was short-lived). Racial, gender, and poverty gaps still exist.

• Inequality's growth slowed-an important source of poverty reduction-but it did not stop, as top continued to pull away.


Growth in median family income over the 1980's and 1990's

80

100

120

Peak 1 2 3 4 5 6 7 8 9 10 11

Pea

k =

100

1980s Cycle

1990s Cycle


Ratio to white median family income by race/ethnicity,1947-00.

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999

Hispanic

African-American


Low (20th percentile), middle (50th), and high-income (95th) growth

40

60

80

100

120

140

160

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

1979

=10

0

`

95th percentile

20th percentile

Median


Ratio of average family income of the richest 5% of families to the poorest 20%

12.0 11.3 11.4

15.7

19.1

14.0

0.0

5.0

10.0

15.0

20.0

25.0

1947 1967 1973 1979 1989 2000


Real family income growth by quintile, 1947-73

115.3%

97.1% 97.7%102.9%

84.0%

0%

20%

40%

60%

80%

100%

120%

140%

Lowest fifth Second fifth Middle fifth Fourth fifth Top fifth


Real family income growth by quintile, 1973-00

10.3%15.5%

24.1%

33.6%

61.6%

0%

10%

20%

30%

40%

50%

60%

70%

Lowest fifth Second fifth Middle fifth Fourth fifth Top fifth


Changes in unemployment and income during recent recessions and recoveries

-12.0%

-8.0%

-4.0%

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

24.0%

1979-1982Recession

1982-1989Recovery

1989-1992Recession

1992-2000Recovery P

erce

nta

ge

po

int

(un

emp

loym

ent)

an

d p

erce

nt

(in

com

e) c

han

ges

Change in Unemployment Rate20th PercentileMedian Income95th Percentile


Poverty rate, 1959-2000

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999

Per

cent

in p

over

ty

1973: 11.1%

2000:11.3%


Change in poverty rates, 1979-2000, children under 6 by race/ethnicity

3.6

-2.8-4.5

6.2

-16.9 -16.3

9.6

-9.9

-13.9

-20

-15

-10

-5

0

5

10

15

1979-89 1989-2000 1995-2000

Perc

en

tag

e-P

oin

t C

ha

ng

e

White African-American Hispanic


Employment rates for mothers, 1985-2000

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Per

cen

t em

plo

yed

Married mothers

Single mothersNever married


Share of poor families with no work, by race/ethnicity, 1979-2000

39.1%36.9% 37.2%

46.1%48.1%

37.1%

41.9%

36.2%

24.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1979 1989 2000

White African-American Hispanic


Income components, low income single mothers, 1979-2000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

Sh

are

of

inc

om

e

Earnings Share

Public Assistance Share


Income of low-income single mother families, gross and net of work expenses,

1979-2000

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Gross Net Gross Net Gross Net Gross Net

(200

0 d

olla

rs)

Earnings OtherPub Asst Food StampsEITC

1979 1989 1995 2000


Real hourly wages of low-wage workers (20th percentile)

6.00

6.50

7.00

7.50

8.00

8.50

9.00

9.50

10.00

1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

2001

dol

lars

Male

Female

Poverty-level wage

A little wealthier, much more indebted

• Over the 1990s, even as the stock market boomed, most Americans held little or no stocks.– By 1998, only 36.3% of households owned more than

$5,000 in stock either directly or indirectly, through a 401k or mutual fund.

– The bottom 40% saw their stock market holdings rise by only 1.1%.

• For many families, it was the run-up in debt that was most dramatic over the 1990s,


Change in assets and liabilities of middle-wealth households, 1989-98

$2,200

$5,500

$8,500

$11,800

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Net worth Stocks All other assets Total debt


Home ownership by race

44%

68%

43%40%

69%

48% 47%

72%

0%

10%

20%

30%

40%

50%

60%

70%

80%

African American Hispanic White

1979 1989 2001


Debt as a percent of personal disposable income, 1947-2001

0%

20%

40%

60%

80%

100%

120%

19

47

19

51

19

55

19

59

19

63

19

67

19

71

19

75

19

79

19

83

19

87

19

91

19

95

19

99

All debt

Home equity

Mortgage debt

Consumer debt


Consumer bankruptcies per 1,000 adults

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Per

1,0

00 a

du

lts

Americans are working longer

• Over the 1990s, we saw a continuation of the trend toward longer hours of work.

• This was driven by the increase in women’s labor supply, and in particular, there are more working mothers.– Nearly three-quarters of all moms work.

• The average two-parent family has one worker at full-time and one at a little over 30 hours per week.


Annual work hours of middle income, married-couple families with children

3,7243,424

3,225

3,988 3,960

3,580

4,320 4,421

3,837

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

African-American Hispanic White

1979 1989 2000


Average annual hours worked among selected OECD countries, 2000

1,877

1,840

1,480

1,562

1,634

1,708

1,801

1,860

1,721

1,817

1,376

1,812

1,624

1,588

0 500 1000 1500 2000

United States

Japan*

Germany**

France*

Italy*

United Kingdom

Canada

Australia

Finland

New Zealand

Norway

Spain

Sweden

Switzerland*


Change in average annual hours worked, selected OECD countries, 1979-2000

32

-286

-489

-244

-88

-107

-31

-44

-116

-138

-210

108

-600 -500 -400 -300 -200 -100 0 100 200

United States

Japan*

Germany**

France*

Italy*

United Kingdom

Canada

Australia

Finland

New Zealand

Norway

Spain

Sweden

Switzerland*


Percent of workers with access to paid vacation, by industry, 1997

63%

91%

92%

89%

64%

86%

79%

0% 20% 40% 60% 80% 100%

Construction

Manufacturing

Transportation andpublic utilities

Wholesale trade

Retail trade

Finance, insurance,and real estate

Services


Percent of workers with access to paid holidays, by industry, 1997

68%

90%

86%

91%

50%

91%

77%

0% 20% 40% 60% 80% 100%

Construction

Manufacturing

Transportation andpublic utilities

Wholesale trade

Retail trade

Finance, insurance,and real estate

Services

Americans are more likely to be poor

• The United States has more children in poverty than in any other OECD nation.

• The exit rate from poverty is much lower in the United States than in other OECD nations.

• In the United States, entry into poverty is nearly twice as likely as other OECD nations to be associated with a new child in the family.


Percent of population remaining poor for at least three years, mid 1990s

9.5%

4.3%

3.0%

5.6%

2.4%

5.1%

2.8%

0.8%

6.5%

1.3%

1.6%

7.8%

3.7%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

U.S.

Germany

France

Italy

U.K.

Canada

Belgium

Denmark

Finland

Ireland

Netherlands

Portugal

Spain


Child poverty is higher in countries with lower social expenditures

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

Social Expenditure as a percent of GDP

Ch

ild

Po

ve

rty

Ra

te Italy

Canada

Spain

U.K

Australia

Belgium

France

The Netherlands

NorwayFinland

Denmark

Sweden

R squared = 0.64

Germany

U.S.


Percent of wages replaced during maternity leave (weeks of paid leave)

0% 20% 40% 60% 80% 100%

United States (0)

Japan (14)

Germany (14)

France (16)

Italy (21.5)

United Kingdom (18)

Canada (15)

Australia (0)

Austria (16)

Belgium (15)

Denmark (30)

Finland (52)

Ireland (14)

Netherlands (16)

New Zealand (0)

Norway (42)

Portugal (24.3)

Spain (16)

Sweden (64)

the state of working america, 2002-03 the labor market recession, which began in october 2000...

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