Downward Mobility: The Recession’s Terrible Legacy?

By Lee A. Daniels

The Great Recession still gripping the American economy has produced alarming numbers in such volume and for so long that new ones have lost their power to shock.
But among the fateful questions those numbers provoke are these: Is the American middle class as a whole caught in a spiral of downward mobility? And are the black and Latino middle classes caught in spirals of even greater virulence.
Actually, we know the answers to these questions. It is yes. What is unknown is whether the spirals will last only until the economy gets its strength back, or whether a more long-lasting structural rearrangement is occurring.
This Labor Day week, the 116th since Congress made it a national holiday as a paean to the American worker, is shadowed by those alarming numbers and terrible possibilities.
The $50-billion public works plan to enhance the nation’s transportation infrastructure – and create jobs — President Obama announced Monday is intended to push the struggling economy into high gear. But, with midterm elections just two months away, the proposal faces a decidedly uphill battle in the Congress. At present, the kind of robust job growth the economy needs does not appear to be in sight. A recent paper from The Hamilton Project, a division of the Brookings Institution in Washington that focuses on research to enhance economic opportunity and growth, noted that even if monthly job creation were to reach the best average monthly totals of 321,000 charted in the explosive 1990s, it would still take nearly five years to regain to pre-recession employment levels.
As it is, all available evidence indicates the sweeping forces behind the squeezing of the middle class won’t diminish their steady intensity anytime soon.
Some of those forces have been apparent for decades. A raft of studies have documented that since the late 1970s the nation’s educational system has failed to produce the volume of skilled workers the economy has needed to remain at the top of the global competitiveness scale. The recent report by the College Board (PDF) showing the United States now 12th among the world’s developed nation’s in the percentage of 25-to-34-year-olds with college degrees only underscores the long-term trend.
One result, according to a recent study from the Center for American Progress and the Hamilton Project “has been a sharp rise in the inequality of wages” (PDF) – which, in turn, contributed to the explosive growth of debt among the middle class.
The report goes on to say that a second, equally significant challenge is the sharp “polarization” during the past two decades of the structure of job opportunities in the American economy. That disparity consists of “expanding job opportunities in both high-skill, high-wage occupations and low-skill, low-wage occupations, coupled with contracting opportunities in middle-wage, middle-skill white-collar and blue-collar jobs.”
This squeeze encompasses both middle-skill, white-collar clerical, administrative, and sales occupations, and blue-collar production, craft and operative occupations.
Because the functions of these kinds of jobs are most susceptible to improvements in technology or, with the rise in educational levels in other countries, can easily be exported to those countries where wages are lower, American workers at those occupational levels and workers without a four-year college degree have been particularly hard hit by job losses.
Indeed, those kind of jobs across a range of industries have comprised a significant portion of the 8 million jobs lost since the recession began in December 2007. That the nation’s lackluster economy hasn’t been able to create enough jobs just to keep pace with the 125,000 new monthly entrants to the labor force only underscores that many of those jobs aren’t likely to return or be replaced in any appreciable numbers.
The evidence is also clear that many laid-off workers who’ve found new jobs in this tough environment are working for substantially lower wages and reduced benefits than their previous jobs provided.
That was the point of an August 31 New York Times article that told of two women who once had jobs with wages that placed them on the lower rungs of the middle class ladder, then lost their jobs, and now, after a difficult search for work, have jobs that pay substantially lower wages. The article’s headline was blunt: “New Job Means Lower Wages for Many.”
For black Americans as a group, the situation is much worse.
Consider these three statistics from the federal government’s August jobs report released Friday: 9.6 percent, 8.7 percent and 16.3 percent.
The first is the official overall unemployment rate; it inched up a tenth of a point from July. The second is the unemployment rate for out-of-work whites; it, too, ticked up a tenth from the previous month.
The last is the August unemployment rate for the black jobless; it leapt seven-tenths of a point from its July rate. (The Latino unemployment rate has hovered between 12 and 13 percent for much of the last year.)
Such stratospheric numbers for black unemployment aren’t at all unusual. While the white unemployment rate has been under 9 percent throughout the recession, the black unemployment rate has been moving ever upward. For the last year the latter’s been consistently above 15 percent; the August rate was only two-tenths lower than the high-water mark of 16.5 percent reached in April. Many of those laid off were holding just those jobs in the middle range of the occupational structure that have proven so susceptible to being eliminated or outsourced.
In fact, the Great Recession has deepened the overall decline in blacks’ economic position that began with the 2001 recession. That erased virtually all of the economic advances blacks had made during the boom years of the 1990s. By 2005, the median black household income of 60.2 percent of median white household income was nearly four points lower than it had been in 2000. In early 2007, the black unemployment rate of 8.3 percent was nearly double the white unemployment rate.
A report produced that year by Demos, a non-partisan public policy research and advocacy organization based in New York City, and the Institute on Assets and Social Policy at Brandeis University, warned that a substantial segment of the middle class – one-fifth of white families, one-third of black families, and two-fifths of Latino families — would be in danger of falling downward should a serious national economic crisis occur. (PDF)
The record numbers of jobless workers who’ve been out of work six months or more – now at 6.2 million – leave no doubt that a dynamic of downward mobility is paring the middle-class numbers of all three groups.
Of course, the Great Recession has most harshly wounded poor black individuals and families. But middle class blacks’ current predicament is important to consider because, just as for whites, they form both a bedrock and a vanguard of blacks’ climb to economic sustainability and wealth. If substantial numbers of them are being stripped of the jobs and wages that provide the opportunities and advantages of a middle-class life, both Black America and the larger society will be profoundly damaged.
Lee A. Daniels is Director of Communications for the NAACP Legal Defense and Educational Fund and Editor In Chief of TheDefendersOnline.com

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