Radio commentary, Feburary 6, 2010
[Sorry for the delay. Better late than never, I hope.]
In our national imaginary, suburbs are places of affluence, and even a complacent isolation from social problems. As is often the case with received wisdom, this one’s in need of a fact-check. In a new paper, Elizabeth Kneebone and Emily Garr of the Brookings Institution find that suburbs are home to the largest and fastest-growing population of poor people in the U.S. Before continuing, I should note, as I always do when I talk about our official poverty line, that it embodies a very mean-spirited definition of poverty that probably undercounts the poor by at least half. That aside, between 2000 and 2008, the number of people under that official poverty line grew by 25%—five times as fast as the growth in central cities and well ahead of the growth in smaller metropolitan and rural areas. As of 2008, large suburbs housed more poor than their associated cities, and almost a third of the nation’s poor.
That growth in suburban penury was led by the Midwest, mainly because of the collapse of the U.S. auto industry. Among the hardest-hit areas were the suburbs of McAllen and El Paso, Texas; Bakersfield, Fresno, and Modesto, California; Little Rock, Arkansas; and Albuquerque, New Mexico. Among the areas showing the worst increase in impoverishment were Grand Rapids, Michigan; Youngstown, Ohio; Detroit; and the Atlanta suburbs. Poverty in New York City and the Los Angeles area actually declined—though these figures predate the recession, so that’s probably no longer true.
Further to the point of the meanness of our poverty line, a family of four with an income of less than $22,000 is considered poor—even if they live in an expensive place like New York or San Francisco. Most poverty researchers regard an income less than twice the poverty line—so in our example, that’d be $44,000 for a family of four—as low-income. By that definition, almost a third of our population is poor. Remarkable for a country that by any standard is rich, and usually praises itself as a land of plenty.
A quick factoid that says a lot. The official annual accounting of U.S. health spending was published earlier this week. It revealed that 17.3% of our GDP now goes to health spending—that’s close to half again as high a share as Germany and France, countries with far better health indicators than ours. Not only that: the public share of that health budget is about to cross 50%. That means that close to 9% of our GDP is taken up by government health spending alone. That’s almost as much as Britain spends on its entire health budget, public and private. And, again, they’ve got better health indicators than we do. What a country.
employment: stabilizing, not recovering
Friday morning brought the release of the January employment report. By recent standards, it wasn’t half bad. By any longer-term standard, it wasn’t so great, but, you know, been down so long, etc.
Employers shed 20,000 jobs in January, driven by steep losses in construction. Manufacturing actually added jobs last month for the first time in three years. Retail employment grew smartly. Other sectors showed mostly modest losses—but the real standout was temp firms. In the past, increases in temp employment have led broader gains. A lot of old relationships have broken down in this recession, so this may no longer hold; maybe we’re in a new regime of permanent impermanence. We shall see. But this does offer some foundation for hope. As does a rise in the average workweek, which is now beginning to look like a trend over the last several months. That too has been a portent of future job gains, though maybe that’s not going to work this time either.
Wage growth was quite weak, which isn’t surprising with the unemployment rate so high. But at least that unemployment rate declined notably last month, falling below the psyschologically important 10% level to 9.7%. Of course it’s still very very high but at least it’s going in the right direction. And hidden unemployment also declined for the month, with the so-called U-6 rate, which accounts for people working part-time even though they’d like full-time work and for people who’ve given up the job search as hopeless and are therefore not counted as officially unemployed, falling 0.8 point for the month. Again, at 16.5%, it’s still very very high, but it too is starting to go in the right direction. Let’s hope it continues.
This month’s report also came with the annual benchmark revisions. The regular monthly reports are based on a survey of employers—a very large one of 300,000 establishments, but it’s still far from complete coverage. But once a year, the Bureau of Labor Statistics totals up the near-complete coverage of the job universe offered by the unemployment insurance system and adjusts their survey results. Normally these adjustments are quite small, a tenth of a percentage point or two. This time it was very large: a downward adjustment of almost a million. That means that total job losses in this recession are almost 8 and a half million. In percentage terms, that’s the worst in modern times, almost three times as bad as the average recession since 1950.
All in all, it looks like the job market is starting to recover, but it’s going to take a long time, and it’s got a lot of ground to make up.