What Does Low Unemployment Rate Mean When Most Jobs Created Are Low Wage?

3.9% Unemployment rate with almost half of new jobs low wage no benefits. And how many stopped looking for work? Saurav Sarkar of the Institute for Policy Studies discusses what’s behind the numbers

What Does Low Unemployment Rate Mean When Most Jobs Created Are Low Wage?

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MARC STEINER: Welcome to The Real News Network. I’m Marc Steiner. Great to have you all with us.

While Trump tweets untruths about the unemployment rate being at 3.9 percent and the GDP being at 4.2 percent, it’s been the lowest 100 years, his lies notwithstanding, just what does this unemployment rate of 3.9 percent really mean? Well, the unemployment rate is down. We just have to ask what jobs do people really have? How much do they earn? How many people are in poverty? How do we measure poverty in 2018? Trump and the Council of Economic Advisors want us to believe the poverty rate is 12 percent or less. But that, as we’ll explore in this conversation, is not reality. It’s absurd. The largest surge in jobs that brought down the unemployment rate are low-wage jobs with no security or benefits.

So what’s behind the drop in unemployment? What are people getting paid in those new jobs? How many folks are working multiple jobs just to make ends meet? How many folks have just stopped looking for jobs and employment? What’s the state of people’s lives? That’s what we’re about to explore with our guest Saurav Sarkar, who is a co-leader of the research team for the Souls of [Poor] Folk, an audit of poverty, systemic racism, militarism, and ecological devastation in the United States, for the Institute for Policy Studies and the Poor People’s Campaign. He’s currently the research coordinator for his work on the Poor People’s Campaign, a national call for moral revival. And Saurav, welcome. Good to have you with us here on The Real News.

SAURAV SARKAR: Thanks so much, Mark. It’s great to be here.

MARC STEINER: So I do want to just begin in a really broad sense here, because they will tout the 3.9 percent unemployment rate is being one of the best in American history, and lower than it has been in many, many years. But the reality is that people’s lives are not going to be affected by that. Let me give you an anecdotal example. Maybe you can just pick up on this. Every time I go to the grocery store and I check out, I ask the people who are at the checkout counter, those that are left, how their day is going. What are they doing? And then I ask them, is this your only job? And no one has ever said to me it’s their only job. They all said no, I have this other job. I work 9:00-5:00, then I come here. Or whatever that is. I mean, the reality of what that unemployment number means is something different than what the stats want us to believe.

SAURAV SARKAR: Yeah, I think that’s exactly right, Marc. You knowl in order to understand the new unemployment figures, and unemployment figures in general, we need to really look at the bigger picture of the economy in our society. What we found when we put together the Souls of Poor Folk audit is that there are 140 million people who are either poor or low income in the United States.

MARC STEINER: What was the number you just used?

SAURAV SARKAR: 140 million.

MARC STEINER: Let me just stop you there for just a moment, Saurav. Because it’s- because that, when people hear that number they go, what? 140 million? So talk about how you came to that number. What you did, what that means.

SAURAV SARKAR: Sure. The government uses something called the official poverty measure to measure poverty. And according to that threshold there are only about 41 million people who fall under the threshold. It was updated recently, but that’s approximately the number. And it basically looks at a very, very low bar for how much money someone can earn in order to be considered to be poor.

What we did is we looked at something called the supplemental poverty measure, which is a more accurate assessment. It’s more up to date. It’s also from the Census Bureau. And we looked at people who are under 200 percent of that. And so that’s where the 140 million figure comes from.

And our rationale for doing this is that we know both anecdotally and in the kinds of figures that have come out from institutions like the Federal Reserve, which found that many people are one financial catastrophe away from being completely decimated, that this official poverty measure doesn’t reflect the reality of people’s lives. And in the same sense, this unemployment figure is not reflecting the reality of the economy or people’s lives.

So you know, that’s the overall context of the new unemployment figure. It’s really not telling us very much about what the ordinary American’s life or the poor American’s life is really like. It doesn’t talk about the person who’s working two or three jobs. It doesn’t talk about the enormous number of people who have left the job market because they’ve given up on trying to find a job. All it really tells you is a very specific thing that it measures.

MARC STEINER: So I’m going to come to some of these and kind of parse them out, but let me start with the one thing you just talked about, which had to do with numbers of people who are no longer looking for work. The labor participation rate, and how that fits into this calculation of a 3.9 percent unemployment. I know that many years ago when the recession was going on, when it first started in 2008 or so, there were 600,000 people who said they were no longer looking for work. I read the recent government reports that said about 300,000 people have dropped out of the labor market. But what do we know about that reality, and how that affects this 3.9 percent?

SAURAV SARKAR: Well, 538, an organization which is not known for its radical position, found that the Obama administration had reported that there were about 500,000 people that were not being counted in the unemployment rate, and the real unemployment rate was actually a point higher than what they were saying. Because what 538 found was that there were really triple that number. There were 1.5 million people who dropped out of the job market and were no longer looking for employment.

And that goes to show you- it’s one source, and again, these numbers are difficult to get to, because the official numbers are so woefully inadequate. But it does show you that there are large numbers of people who have given up on trying to find employment for other reasons who are not being counted in the unemployment figures, and who really are being ignored by both the press and politicians.

MARC STEINER: Do we have a sense of what that number is now? What the reality is in 2018?

SAURAV SARKAR: You know, I don’t have an exact number. But I would guess it’s somewhere around 1.5 million, still.

MARC STEINER: Well, that’s something we can explore in a greater depth another time, because I think that’s really a huge factor in this that we never count in, and is often kind of ignored when we talk about unemployment and employment. But let’s really tackle this issue that you’ve delved into deeply at IPS with the Poor People’s Campaign around the question of what has happened to our jobs in the last 10 years, what’s happened to our jobs in the last 40 years in America that’s changed the dynamic so drastically. That when you say 3.9 percent unemployed, it doesn’t tell us the real picture of what people are living through, and what they have to do to survive.

SAURAV SARKAR: Well, we know what the bigger picture of the economy is. It’s just that politicians and the mainstream media don’t usually like to talk about it. We know the unions have been decimated, that inequality is on the rise. That more and more of national income and productivity gains have gone to the top 1 percent. At the same time, for the rest of us, we’re struggling to get by. People are working more than one job. People are struggling to find childcare. They’re struggling with medical expenses, in particular, which are driving enormous numbers of people from a reasonable level of income down into the poor or low income category.

You know, ultimately the people of the United States have been increasingly suffering over the last 40 years, and people in power seem disinclined to pay attention to that.

MARC STEINER: One of the stats I read, it might have come from some of the things that you were working on, was that 44 percent of the jobs that were created during 2010-2014 were actually in these low-wage jobs. Only 26 percent were in the medium range of income. Is that relatively true?

SAURAV SARKAR: Yes, that’s exactly right.

MARC STEINER: So I mean- so what are these jobs that are being created? What are these jobs people are taking?

SAURAV SARKAR: We’re taking about restaurant jobs, service sector jobs where people are relying on the tipped wage. We’re talking about low-income jobs where people are struggling to get by and live with dignity, and their employers are making it impossible for them to do so.

MARC STEINER: So I’m also very curious politically what this means. I mean, this is being pushed, being touted as the greatest economic boon in America, which is something the Republicans are pushing, I think, at this moment. I haven’t seen a lot of- I’ve not seen a lot of response from many Democrats in terms of really pushing back with the kind of facts that you come up with. I mean, this seems to me it would be fertile for a huge political battle about the future of our country, but I’m not really seeing it.

SAURAV SARKAR: I think we are having a political battle for the future for our country. It’s just not happening in Washington, D.C. I think it’s happening-

MARC STEINER: I think that’s true, right.

SAURAV SARKAR: I think it’s happening around the country. I think movements like Occupy, I think the Black Lives Matter and Movement for Black Lives focus on economics and issues like gentrification. I think, you know, even issues like abortion access have a class dimension to them. So you know, you do see an enormous amount of popular resistance. I think if you went up to the average person- or you know, I like to joke that if you did a national level plebiscite and ask people, do you feel like you’re in the most successful economy of all time? I’m pretty sure most people would say no. Because on a personal level, in terms of their own lives and in terms of the lives of their loved ones, people know that there are still a lot of people struggling out there. And in fact, it’s most people who are struggling, whether it’s the 140 million people who are low income, or the people who are just above that are desperate to avoid falling into that category.

MARC STEINER: One of the things you posit is that when you look at what poverty means, and what full employment means- almost full employment means 3.9 percent- that a family of four, depending on geographic location, what you can describe in a moment, in places where people work and live, living on $47,000 a year or less is poverty, from your perspective. From the perspective of your research. Talk a bit about that.

SAURAV SARKAR: Right. It’s a little bit more complicated than that, because the exact numerical threshold changes based on what area of the country they’re in, and whether they’re in a rural area or an urban area. Those are sort of some of the details that separate out the supplemental poverty measure from the official poverty measure. What it does tell you is that there are a lot of people in this country that are being labeled middle class, that are being labeled OK, but are struggling to pay their deductibles, are struggling to make ends meet on one job. They have to make difficult financial choices at the end of each month. You know, they’re having to choose between buying books for their kids, or saving for college for their kids, and paying their medical bills.

And that’s largely going ignored. And I think one of the reasons why there is a public battle going on in small- and hopefully eventually in large ways- around the country is that those people’s lives are being ignored.

MARC STEINER: Yeah. And part of it, maybe, is you think that also, Saurav, could be that given the nature of this country and how people like to see themselves, that we like to see- people see themselves as middle class, not poor. And that someone might say I’m broke, I’m strapped. I’m not poor. And it’s a real perception issue in this country to kind of wrestle with what that means. And for most people- I don’t think most people in that group would not say I’m poor.

SAURAV SARKAR: Well, I think that’s one of the primary things that the Poor People’s Campaign is attempting to tackle, and that we’re attempting to help them tackle. They are really interested in challenging the moral narrative that says that poverty is the fault of the poor. Poverty is not the fault of the poor. Poverty is the fault of social conditions that are created by politicians and people in power that ultimately leave us with not enough to live on. It’s not because of laziness. It’s not because of immorality. It’s not because of sin. It’s because people are struggling with the hand that they’re dealt. And you know, that’s not something that we can wish away.

MARC STEINER: So what can you tell us in terms of your research about what kinds of jobs are being created? How much they’re paying? And what do we know about that, and what do we know about the numbers of people having to work multiple jobs just to make ends meet?

SAURAV SARKAR: Well, if you been on the country at tipped wages, for example, or the resistance to Fight for $15, you can see that, you know, if you tell someone that, like in Wyoming, it’s OK that the tipped wage is, I think, something like $2.33. You know, telling someone that they can live on that and be dependent on the kindness of strangers to increase that through tips, it’s absurd. It’s not not the kind of situation that someone can live in.

And we see an increasing number of those jobs. We see an increasing number of temp jobs. And precarious jobs are ripe for exploitation, ripe for termination. It’s increasingly difficult for people to feel stable or confident in their futures, or even in their presents, when they are relying on temporary work for their incomes. And that’s become a larger and larger portion of the economy since 1990. The same with low-wage work, as opposed to middle-wage work. It’s become a larger and larger share of the growth in jobs since around 1990.

MARC STEINER: So I’m just curious, Saurav, before we close. I know you’re a researcher, and you’re not a politician out there in the front making statements. But if you were standing in front of Donald Trump or standing in front of any of these people saying we have 3.9 percent unemployment. It’s wonderful, it’s incredible, America’s changing. What would you say? What would you say to their face?

SAURAV SARKAR: I mean, I would say look the 140 million poor or low income people in the United States in the face and tell them that they’re doing OK. Because they know that they’re not doing OK. We know that they’re not doing OK. So why don’t you know that they’re not doing OK?

MARC STEINER: Saurav Sarkar, I want to thank you so much for being with us, and for the work that you do at the Institute for Policy Studies and for the Poor People’s Campaign. It’s been a pleasure to talk to you, I look forward to doing it again soon.

SAURAV SARKAR: Thanks so much, Mark. I really appreciate it.

MARC STEINER: Thank you so much. And I’m Marc Steiner here for The Real News Network. We’ll be talking together soon. Take care.