Unemployment and the Presidential Election

| Posted: November 14th, 2012

During much of the presidential election campaign, Republican candidate Mitt Romney talked about the Obama administration’s failure to get unemployment back below the 8 percent mark. That theme stalled briefly in October, when the previous month’s 7.8 percent unemployment rate was announced. But for voters in many of the top 100 metros, Romney’s argument might not have rung true even earlier. Because by October, when the September unemployment figures were announced, unemployment was already below 8 percent and employment was growing in many states, especially in the battleground states that the two candidates were fighting so hard to win.

In four of the six battleground states, unemployment was well below 8 percent, and in the other two, (Colorado and Florida) employment was growing even though unemployment was still high.

In North Carolina and Arizona, both deemed by the New York Times to be “leaning red” (and, indeed, voted red), unemployment was well above the critical mark. The leaning blue (and voting blue) states are more of a mixed bag. In Minnesota and New Mexico, unemployment rates were below 8 percent, but unemployment was high in Pennsylvania and way above 8 percent in Michigan and Nevada.

Thirty-nine of the 100 top metros are in 13 states that aren’t solidly red or blue. And these metros present an even more interesting picture. In Ohio, for example, the unemployment rates were significantly below the national average in five of the seven top metros and employment was increasing in most of them.

In three states where the unemployment rate remained at 8 percent or above (Colorado, Michigan and Pennsylvania), some of their major metros were below the national average, including Denver (7.4), Grand Rapids (6.0), Lansing (6.2), and Pittsburgh (6.7). This does not appear to be an artifact of a shrinking labor force; the number of net new jobs appears to be increasing in those locales.

The fact that three of the “voting blue” states had high unemployment rates shows that gauging voting preferences solely by the official unemployment rate is too simple. The overall picture in these swing states would suggest that campaign ads about a stagnant economy did not trump the labor market reality that was closest to the voters.

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Poverty in America

| Posted: September 24th, 2012

The Census Bureau this month released its Income, Poverty, and Health Insurance Coverage in the United States: 2011 report, which is based on the Current Population Survey. The release came with lots of numbers and it is easy to get buried in them, not seeing the forest for the trees, so to speak. A closer look reveals trends and patterns that tell us more about poverty and employment over the past year.

I focused on two tidbits in the annual CPS report: the link between region and poverty and the link between full-time work and poverty. The South was the only region that saw a reduction in both the percent and the number of people in poverty, even though it still had the highest poverty rate (16.0 percent) and the largest number of people in poverty (18.4 million) among the four major regions (see chart). The report also pointed out that the poverty rate for those who worked full time, year-round was 2.8 percent versus 16.3 percent for those who were not full-time workers. While these respective poverty rates did not change over the past year, it is possible that people moving from part-time or part-year work to full-time, year-round work would be less likely to be poor. And the number of men and women working full time, year-round did increase between 2010 and 2011. While median earnings for full-time workers did not increase (in fact, they declined), the greater earnings from working full time could have been enough to carry these workers’ families over the poverty line.

Changes in Poverty Rate by Region, 2010 to 2011

Thinking about poverty in regional terms, it should not be surprising that the South had the only significant drop in poverty levels. Job growth was relatively robust compared with the nation as a whole. In a Metrotrends commentary, visiting scholar Erica Meade looked at job loss and job growth over the recession and recovery periods. While the largest 100 U.S. metropolitan areas lost 5 percent of their jobs during the recession and gained only 1 percent over the past three years of recovery, there was wide variation among the group. The metro areas in the South, as a group, were more resistant or resilient than those in other regions. Metros in the Southwest, particularly those in Texas, had lower job losses and higher job growth than the nation as a whole. Overall, the median percent increase in jobs for the 100 largest metros was 1 percent between June 2009 and May 2012, but 16 of the 36 metros in the South had increases of 3 percent or more.

Paradoxically, the poverty rate declines in the South don’t show up in the state-level data from the American Community Survey (ACS), which the Census Bureau released on September 19. But the national statistics from these two surveys are different as well, with the CPS showing a poverty rate of 15.0 percent while the ACS showed a rate of 15.9 percent, up from 15.3 percent in 2010.

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Has Unemployment Insurance Helped Those Who Need It the Most?

| Posted: August 21st, 2012

The second in a two-part introduction to the Urban Institute's Unemployment and Recovery Project. Yesterday: an overview of the project as a whole 

The latest unemployment report confirms what most people already think: the economic expansion is not robust enough to lower unemployment significantly. Over 5 million people have been looking for work for at least six months without much success.

Many people have received unemployment compensation, as well as other benefits, to help them make ends meet while they search for jobs. But a large segment of the population has not had access to the unemployment insurance program. Recent research I completed with my colleague Austin Nichols under the Urban Institute’s Unemployment and Recovery Project reveals that this group is made up disproportionately of minorities. African Americans, in particular, are much less likely to have received unemployment benefits than non-Hispanic whites, according to data from the Survey of Income and Program Participation. Just under one in four African Americans who were unemployed in 2010 received those benefits compared with one in three whites.

How Do Various Characteristics Affect Your Likelihood of Receiving Unemployment Insurance Benefits in 2010? (Percentage Point Difference)

These differences exist even though the federal government enhanced unemployment insurance benefits. By extending and increasing aid to the unemployed through the Emergency Unemployment Compensation program, the federal government allowed people to stay on unemployment compensation longer. In addition, the federal government provided incentives to states to expand eligibility for benefits to a broader portion of the unemployed.

Differences in benefit receipt by race and ethnicity can be related to the types of jobs workers lost, the length of time they had been working before job separation, the industries in which they worked, and their personal characteristics (such as educational attainment). But even when you compare workers who are pretty much the same on these important variables, African Americans, and to a lesser extent Hispanics, were less likely to get unemployment benefits than whites. For example, although one of every four whites without a high school diploma received benefits, only one in eight African Americans with the same level of education did.

Other factors are clearly important. Being on the job for a short period of time before becoming unemployed means a worker is less likely to get benefits. So does living in certain parts of the country. Being a resident of a Southern state is associated with a lower likelihood of receiving unemployment compensation because many Southern states have less generous programs and more stringent eligibility requirements. But program features alone don’t explain all of the racial differences.

What happens when you account for all the differences between different groups of workers? The racial and ethnic differences are still there. The difference between black and white rates of receipt remains large and statistically significant—about 13 percentage points. The difference between Hispanics and whites is smaller than that but still significant.

The fact that African Americans are less likely to receive benefits after taking all these other factors into account means that many low-wage, unemployed, African American workers are likely suffering more economic hardship than their white counterparts, often with fewer assets to fall back on. Attention should be given to policies that would lessen these differences. Many of these policies—such as extending eligibility to workers with shorter job tenure, those who leave jobs for family reasons, and individuals seeking part-time work—would help all workers in those situations, not just African Americans or Hispanics. But other policies might be needed to counter or account for discriminatory actions that affect only minorities.

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Growing Student Debt: A Problem for Many Families

| Posted: June 7th, 2012

Over the past few months, high school seniors and their families across the United States have been making decisions about college—where to go and how to pay for it. So the release of a recent study on student debt is particularly timely. The study looks at students who took out loans and then dropped out of college. This is one of the worst outcomes possible; the borrowers are saddled with debt but lack the degree that would raise their  earning potential, helping them pay off the loan. Dropping out is a bigger problem at for-profit institutions than at nonprofits, with over 50 percent of borrowers at four-year, for-profit institutions and over 40 percent of borrowers at two-year, for-profit institutions dropping out (figure 1).

Even students who graduate leave school more heavily indebted than in the past. In 2008, graduates who earned a bachelor’s degree borrowed 50 percent more, in inflation-adjusted dollars, than those who graduated in 1996. Graduates who earned an associate’s degree or undergraduate certificate borrowed more than twice as much as those who graduated in 1996.

Anyone who hears about growing student debt could well decide to pass on college, but is that the right decision? Probably not, because a college degree pays off for most students in the form of higher income and more career options. But the debt topic should prompt serious family discussion about how much various college options cost, how to pay for them, how much to work while in school, and how the student should manage his or her finances during and after college. In fact, figuring out how to finance an education can be an important teachable moment for young people, as going off to college is usually the first time many will be making independent decisions about living expenses and credit cards and learning how to balance work and studies.

Figuring out the cost of college is somewhat easier now, due to the Higher Education Opportunity Act of 2008. The Act requires all higher education institutions receiving financial aid to post a net price calculator on their websites. The calculator helps students and their families figure out the true cost of attending that institution for one year. But students (and sometimes their parents) are hampered by limited financial knowledge. Studies  have shown that financial literacy is relatively low among both youth and adults—particularly among low-income and minority families, the very populations to whom for-profit schools market their programs (and student loan opportunities).

The federal government is promoting greater financial literacy through its Financial Literacy and Education Commission. But these efforts are only effective if families and educational institutions use available tools to help students make good decisions, keeping in mind not only their future debt burden, but also the long-term financial benefit of having a college degree.

Figure 1: Percent of Borrowers Who Dropped Out of Postsecondary Institutions, 2001 and 2009

Source: Mary Nguyen, “Degreeless in Debt: What Happens to Borrowers Who Drop Out”  (Washington, DC: Education Sector, 2012)

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'Model Minority' Myth Hides the Economic Realities of Many Asian Americans

| Posted: May 10th, 2012

May is Asian/Pacific American Heritage Month, so it is a good time to get rid of the “model minority” stereotype and explore the diversity within this group. The median education level of Asian Americans is higher than that of non-Asian Americans and their unemployment rates are lower, on average, as well, contributing to the “model minority” label. But these general statistics mask large differences in the economic situation of Asians in the United States.

Labor market positions vary greatly among different Asian subgroups, as detailed in a recent Monthly Labor Review article, which uses data from 2008 through 2010. For example, three-quarters of Asian Indians have at least a bachelor’s degree and over two-thirds are in management or professional jobs. But Vietnamese are less well positioned. One-fifth of them have less than a high school diploma and similar numbers are in low-paying personal care and service jobs.  And while unemployment rates for all Asian groups are lower than rates for non-Asians, once they lose their jobs, Chinese and Filipino Americans are about 25 percent more likely to be unemployed for at least six months than other Asian and non-Asian groups.

Employed People by Occupation, Asian Indians and Vietnamese, averages for the combined years 2008-2010

Source: Monthly Labor Review, November 2011

Even the most successful Asian Americans face barriers to upward mobility in corporate America.  A Leadership Education for Asian Pacifics (LEAP) study finds that Asians are far less likely to work their way up to CEO and board positions in private corporations. Although they are 6 percent of the population and 6.5 percent of the labor force, Asians hold only 2.4 percent of the total number of board seats in Fortune 500 companies and only 18 Asian Pacific Americans hold the title of Chairman, President, CEO or Vice Chair.

The economic position of Asian children also varies substantially across the country. The Asian child poverty rate varies among states with a sizeable Asian population—rising above the national Asian child poverty rate of 10.5 percent in Minnesota and New York, for example, while falling below the national rate in Illinois and Virginia, according to the Urban Institute’s Children of Immigrants Data Tool.  Some of these differences are related to the different concentrations of Asian subgroups, primarily more recent immigrants. In other cases, the differences are related to economic opportunity.

So while Asian Americans on average fare well on measures of education and employment, a closer look reveals great diversity by ethnicity, immigration status, and state—as well as barriers to economic success. The “model minority” stereotype papers over these differences and often hides the challenges many Asians still face.

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The Unemployment Picture: Reading Between The Lines

| Posted: April 10th, 2012

The unemployment figures for March, released last Friday, were higher than expected by those basing their predictions on declining unemployment insurance claims. The number of employed workers went up by only 120,000, about half what was expected, leaving the unemployment rate steady at 8.2 percent, according to the Bureau of Labor Statistics. This contrasted with predictions of job growth in the vicinity of 200,000, which many based on the previous day’s news that initial unemployment insurance claims for the last week in March had gone down. Is there a contradiction here? Not really.

While unemployment insurance (UI) claims tend to move in the same direction as the unemployment rate, they don’t necessarily move in lock step. First of all, not everyone who loses or leaves a job is eligible for unemployment compensation. Eligibility varies according to the individual worker’s prior work experience, the nature of the job separation, and the industry he or she worked in. Some of this difference can be seen in how the overall unemployment rate differs from the unemployment rate for the insured employed—those who are in jobs covered by UI. The insured unemployment rate for the third week in March was 2.6 percent, compared with the overall rate of 8.2 percent. And the relationship between the two rates can vary by state. For example, of the nine states that had the highest insured unemployment rates in mid-March, ranging from 4 to 6 percent, only three of them (California, New Jersey, and Puerto Rico) had overall unemployment rates of 9 percent or more.

Another factor accounting for the seeming paradox is the composition of the unemployed. A large portion of the unemployed are people who were not looking for work previously. Some are workers who, for various reasons, had left the labor force and are now returning. Others are people who had never worked before and are now looking for jobs. Together, they made up nearly 37 percent of the unemployed in March. In addition, over 8 percent of the unemployed are people who voluntarily left their jobs and are looking for new ones. This last group has grown over the past year. Most of the job seekers in these three groups would not be eligible for UI.

The economy is growing enough to generate some new jobs, but not fast enough to cover everyone looking for work. Some of the unemployed have been looking for work for a long time, others are returning to or just entering the job market, while still others are confident enough to voluntarily leave an old job behind and look for another one. They aren’t all eligible for unemployment insurance, so we should not be content to look at UI claims and think the hard work of job generation is behind us.

Composition of Unemployment by Reason for Unemployment, In Percent

Source:  Bureau of Labor Statistics, table A-11

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Women Have Closed the Gender Gap in Education, But Not Wages

| Posted: March 14th, 2012

March is Women’s History Month, which prompted the U.S. Census Bureau to issue a factsheet about women’s status. One of the notable facts is the number and proportion of women with a bachelor’s degree compared with the number of men. In 2010, 30.7 million women age 25 or older had a bachelor’s degree or higher. This is slightly more than the number of men, but there are more women over age 25. Women are also more likely to be college graduates than men. Just looking at people between the ages of 25 and 34 in 2010, the percentage of women with a bachelor’s degree is higher than the percentage of men. This is true for all racial and ethnic groups, with the percentage of women with a bachelor’s degree (and no more) about 5 percentage points higher than for men in their same race and age group. The only exception is Asians between the ages of 25 and 29, where the percent with degrees is about the same for men and for women (36 percent).  Asian women are also the most likely to have a college degree, while Hispanic women are least likely (about 13 percent).

Median Usual Weekly Earnings of Full-Time Workers, 25 Years and Older, Constant (2010) Dollars

Source: BLS (2010) statistics, table 17

What has prompted the increased educational attainment of women? No doubt there are many factors, but the economic returns are clearly one incentive. According to the Bureau of Labor Statistics, the median weekly earnings for a woman with a bachelor’s degree or higher who works full-time have increased by 33 percent in real terms since 1979. This compares with a 20 percent increase in earnings for men with the same level of educational attainment. The return for additional education is also apparent when comparing women with a college education to those with only a high school diploma. In 2010, college-educated women had weekly earnings that were 80 percent higher than the weekly earnings of high school-educated women.

Still, women have not reached equality with men. College-educated women made 74 percent of the weekly earnings of college-educated men, roughly the same gender ratio as for high school-educated workers. But it’s more than the 67 percent ratio for college-educated women in 1979. The remaining gap could be a combination of differences in occupation or industry, since women are still more likely to have jobs that pay somewhat less and, as professionals, they are more likely to be in nonprofit or public jobs.

Women have come far since 1979, closing the gap—and then some—in educational attainment, but there’s still a long way to go to shrink the gender gap in wages.

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Halftime in America: Will Manufacturing Jobs Make a Comeback?

| Posted: February 10th, 2012

In the Super Bowl halftime ad that ran on February 5, Clint Eastwood compares the current state of the U.S. economy to halftime in a football game. It’s a comparison the ad uses to describe Detroit’s economic comeback: “Motor City,” Eastwood said, “is fighting again.” While it is early in the second half, it might be worth seeing if Detroit and other hard-hit manufacturing centers are making much headway toward the distant goal line.

An examination of job growth in metropolitan areas with large minority and immigrant populations shows that many of these communities suffered from a loss of manufacturing jobs that was not offset by job growth in other sectors between 2000 and 2009. What has happened to the 15 metros that were labeled “high-manufacturing areas”?

Average Job Growth in High Manufacturing Metro Areas, 2009-2011

Source: Urban Institute analysis of BLS Current Employment Statistics (CES) Data

The MetroTrends interactive map on job growth shows that overall job growth in these communities between 2009 and 2011 ranged from -1.5 percent (in Stockton, CA) to 5.3 percent (in Nashville, TN). Job growth in the 15 high-manufacturing areas reflects patterns in other metros, which generally saw private job gains or losses between zero and 4 percent. In the manufacturing sector, some metros did better and some did worse, with job growth ranging from -5.4 percent (in Augusta, GA) to 18.6 percent (in Detroit, MI). Eight of the 15 metros experienced net losses of manufacturing jobs between 2009 and 2011:  Augusta, Los Angeles, Indianapolis, Charlotte, Stockton, Chicago, Oxnard, and Minneapolis.

Of the seven metro areas where manufacturing jobs grew, five had gains above the national average of 1.3 percent: San Jose, Houston, Cleveland, Milwaukee, and Detroit. The Midwest region had some of the highest rates of growth in manufacturing jobs between 2009 and 2011, but also some of the lowest rates. In the South and West, manufacturing jobs shrank or grew minimally between 2009 or 2011, with the exception of Houston and San Jose. But win or lose, these 15 metros were all in the top half of the 100 largest metros in terms of manufacturing job growth.

So it looks like the Motor City and some older industrial centers are gaining yardage early in the second half of the recovery, but the goal of robust employment growth is still a long way away for many of them.

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Who is Benefiting From the Recovery?

| Posted: January 24th, 2012

The employment numbers released in January suggested that 2011 ended on an up note. The unemployment rate had dropped to 8.5 percent, the lowest it had been since February 2009. The year-end number was down a little over one-half of a percent since August. Other indicators were also positive, with the number of part-time workers who would rather be working full time down 371,000 and the number who were not looking for work because they thought nothing was available down a similar amount.

But does this mean we are back to where we were in 2009? That depends on what measure you use. The unemployment rate is just one way of measuring the state of the labor market. Another is the employment-to-population ratio (E/P), which measures the proportion of the adult population that has a job. Unlike the unemployment rate, it isn’t dependent on who is actually looking for work. By this measure, we are not back to early 2009. In February 2009, just over 60 percent of the population had jobs, a slightly larger proportion than the 58.5 percent who held jobs in December 2011.

The picture gets more complicated when you look at things by race and gender. For whites, the unemployment rate is back to where it was in 2009. Among African Americans, the unemployment rate was 15.8 in December 2011, a significant 2 percentage points above the rate in February 2009. And the proportion of the African American population with jobs was just over 52 percent, slightly less than the 54.4 percent with jobs in early 2009.

While we still have a long way to go to dig out of the recession, the declining unemployment rate is not a false signal. Over the last five months of 2011, the economy generated enough new jobs to employ one million additional workers. But who is getting these jobs? Close examination of the data for the last half of 2011 suggests that this is a “man’s” recovery, that is, men are benefiting more from the expansion than women are. That would make sense since unemployment went up more for men than it did for women. But for African Americans, it seems that men are gaining jobs while women are losing them.

Between August and December, the unemployment rate for African American men declined from 18 percent to 15.7 percent, enough for the ratio of black male to white male unemployment to drop from 2.3 to 2.2. This decline in unemployment is not just because fewer people were looking for work. Well over 200,000 African American men had jobs in December who didn’t have them in August. But on the other side, the statistics say that about 60,000 fewer African American women had jobs in December than in August. Their unemployment rate increased from 13.4 percent to 13.9 percent. The situation among whites is not quite as stark, but the trends are similar, with white men gaining and white women more or less standing still.

Seasonally Adjusted Unemployment Rates by Race and Gender, 2009-2011

Source: Bureau of Labor Statistics, Current Population Survey

This gap partly can be explained by differences in the types of jobs men and women hold. The areas of expansion include sectors where men dominate, like warehousing and transportation jobs. On the other hand, government jobs, which are more likely to be women’s jobs, declined somewhat at the end of 2011.

It is not clear whether this trend will continue, though cash-strapped state and local governments are not likely to be adding jobs soon. Most households, whether headed by a married couple or a woman alone, need the woman’s paycheck to make ends meet. So families are not likely to think the recovery is complete until both men and women who want to work have jobs.

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