Did the Rising Tide Eliminate Our "Surplus Population?
Wray, L. Randall, Journal of Economic Issues
I do not believe that William Jefferson Clinton is an evil man. I think he really does feel at least some of the pain suffered by our nation's unfortunate. Yet, how does one explain his almost single-minded devotion to the cause of "ending welfare as we know it"? According to Jason DeParle and Steven Holmes, Clinton believed that "once taxpayers started viewing the poor as workers, not welfare cheats, a more generous era would ensue" (2000, 3). At the end of his term in office, President Clinton believes that the evidence supports his judgement: "This is the first recovery in three decades where everybody got better at the same time" (2).
Two years ago, Sandy Darity suggested that a large segment of young black males has become a "surplus" population, not needed in pecuniary enterprise (1999).
He highlighted the loss of freedom, the social exclusion, and the mental and physical degradation that result from long-term joblessness. Hence, those who suffer prolonged exclusion can become virtually unemployable, and their role in our society has been reduced to little more than serving as a cautionary example of what might happen to those who do not conform. The lucky few manage to get jobs as caretakers for that surplus population--as prison guards, police, security guards, social workers, nurses, and teachers in deteriorating public schools--but for the rest, joblessness. If Darity is right, then Clinton's welfare-to-work agenda is doomed to fail because many African Americans, particularly young, inner city males, are "surplus," not needed by our nation's employers.
There have been many studies that question the extent to which "welfare-to-work" programs have been successful at bringing former recipients into the labor force, at least on a permanent basis. These provide some direct evidence against Clinton's claims; however, I won't pursue this. Further, many have pointed out that the government's safety nets were dismantled during a boom, and as Robert Reich warns, "When unemployment starts creeping up again, a long line of people are going to be in trouble because we've taken away a safety net" (DeParle and Holmes 2000, 3). Hence, the success of welfare-to-work should not be judged by its apparent success in an expansion but by its performance in downturns.
In this article I look in more detail at the experience of black males, paying particular attention to those of "prime age" (18-44 years), during the Clinton expansion. I will try to determine to what extent this population can be thought of as "surplus" in the sense that it does not make up an employable "reserve army" but rather functions only as the "dead weight" "living images of the consequences of pauperization." To some extent, this involves determining whether the Clinton "rising tide" has indeed "lifted the boats" of this population. We will see that the "living images" of this surplus population can be viewed most vividly in America's rising propensity to incarcerate. I next look at the policy implications if a rising tide has not been successful at lifting these boats. I conclude that a strategy that would be more likely to succeed would entail increasing job opportunities to the "pre-prison" population of young males with low educational attainment. This would reduce the likelihood that they woul d become members of the "surplus" population, and would at the same time reduce the "dead weight of the industrial reserve army" (Darity 1999, 492).
Employment Prospects for Prime Age Black Males during the Clinton Expansion
Most commentaries on the Clinton-era labor "market" have focused on the falling civilian labor force unemployment rate, which has fallen by nearly half since its peak during 1992. The unemployment rate for white males over age 20 fell sharply and remained below 3 percent for 14 months, before rising in November 2000. In contrast, the civilian labor force unemployment rate for black males (over age 16) rose sharply during the recession of 1974-75, approximately doubling (to more than 15 percent). During the rest of the 1970s, it gradually fell to a low of about 11 percent in 1979, then rose very sharply during the Reagan recession, peaking at nearly 23 percent. During the expansion of the 1980s, it came back down to a bit over 11 percent. By the end of the Clinton expansion, the black male unemployment rate had returned to the levels last seen during the Nixon years. In sum, it appears that it takes a very robust expansion to return the unemployment rate for this group to the lower levels experienced 30 years ago. Still, this evidence is consistent with Clinton's claim that his expansion has "lifted all boats" in the sense that unemployment rates have come down, although the rate for black males is well over twice as high as that for white males.
Of course, unemployment rates tell only part of the story. If a large proportion of African American males are "surplus," they will not be found within the official unemployment category because they are not actively seeking work. For this reason, I prefer to use the employment-population ratio as a better indicator of the job prospects facing workers and potential workers. The civilian employment-population ratio for white males twenty years and older stood at just under 76 percent in January 1990, fell to less than 73 percent during the Bush recession, and then peaked at 75.3 percent in February of 2000. The employment-population ratio for black males twenty years and over was about 74 percent in the early 1970s; it fell to less than 67 percent during the deep recession of 1974-5, and to just over 60 percent during the Reagan recession. It recovered to a little over 67 percent by the end of the 1980s. During the Clinton expansion, it peaked at 68.9 percent in February of 2000, and has since fallen by more than 1 percent. Note, however, that the peak employment rate for blacks achieved during the Clinton expansion is not a whole lot better than the trough reached during the 1974-5 recession, nor is it currently better than the peak reached at the end of the 1980s.
Thus, while employment rates tell a story similar to that told by unemployment rates, the story is a bit less optimistic. We find that at the peak of the Clinton expansion, about 25 percent of civilian white males over age 20 are not employed, while over 30 percent of civilian black males are not employed. Note that these figures are for the civilian labor force and civilian population, excluding those in the armed forces as well as those who are institutionalized. The armed forces now "employ" about 1.4 million men and women, compared with a peak of nearly 3.5 million in 1968. The military disproportionately removes young black males from the civilian labor force. With the rising qualifications of new recruits (the educational standards of the military are far higher than the average educational attainment of the labor force in general), most recruits probably would have found civilian employment, but this might have forced some other workers out of employment.
Still, my main concern is with a portion of the "institutionalized" population-those in prison and jail. The number of incarcerated Americans has grown rapidly, from less than half a million in 1980 to over two million today. About 90 percent of these are males, and most of these are prime age males. A number of studies have demonstrated that official unemployment rates would be considerably higher if they were adjusted for the rapid increase in the inmate (prison and jail) population witnessed during the last twenty years. Bruce Western and Kathy Beckett (1999) find that the unemployment rate between 1990 and 1994 would have been 7.7 percent instead of the official 5.9 percent. The effect is larger for black men, whose unemployment rate would have been 18.8 percent instead of the official 11.3 percent.
In my own research, I have focused on a particular segment of prime age males--high school dropouts. Forty--seven percent of all inmates do not have a high school degree--versus 17 percent of the US adult population as a whole. For inmates under age 21, the figure is an astounding 75 percent. Data from California show that only 35 percent of inmates who served short, one-to two-year, sentences were employed prior to being arrested (Kling and Krueger 1999). Thus, our prison population is largely made up of lowly educated males who suffered from very low employment rates before incarceration.
In 1998 there were just under 8.7 million non-institutionalized males with less than a high school degree between the ages of 18 and 44 (prime age) in the United States. Of these, about 5.9 million were employed, 850,000 were officially unemployed, and 1.9 million were out of the labor force. In addition, there were nearly 1.8 million incarcerated prime age males, about half of whom did not have a high school degree. Thus, nearly 10 percent of all prime age males without a high school degree were in jail or prison in 1998. To put this in perspective, there were as many prime age males with low educational attainment in prison as were counted as unemployed, and the unemployment rate of this group would nearly double from 9.8 percent to 18.2 percent if prisoners were included as unemployed. In 1997 there were another 4 million individuals--mostly males--on parole or probation. This could add nearly 2 million more non-institutionalized prime age males without a high school degree to our totals.
Most of the incarcerated are nonwhite. While the overall (jail plus prison) incarceration rate for the United States reached 564 in 1994, it stood at 3,370 for black males.
In 1998 there were just over 1.3 million prime age, non-institutionalized, black males without a high school degree. Of these, just over 600,000 were employed, almost 200,000 were counted as unemployed, and a shocking half a million were out of the labor force. This means that the number of incarcerated prime age black males without a high school degree is more than two-thirds of the number employed, over double the number unemployed, and about equal to the number of non-institutionalized individuals out of the labor force. Perhaps one-fourth of all prime age black males who have not graduated from high school are currently incarcerated. Another 900,000 prime age black males without a high school degree might be under control of the criminal justice system--for a total of 1.4 million. As many as three-quarters of prime age black males without a high school degree might be under the control of the correctional system.
The average inmate costs society about $25-30,000 per year while incarcerated, and about $80,000 per year after release from prison-resulting largely from the fact that a large portion of prisoners do not become employed and quickly begin committing crimes (at an average rate of twelve to fifteen crimes a year). Hence, there has been a growing movement to employ prisoners to cut both incarceration costs and post-release costs. Evidence shows that prison employment reduces recidivism somewhat, enhances the probability of employment after release, and reduces the probability that the released innate will resume criminal behavior-although it appears that such improvements are fairly moderate. By the same token, the nominal value of the output of prison labor is fairly small-on average, prisoners are at best only one-third as productive as non-incarcerated labor. Thus, the primary benefit of prison labor is reduction of post-release crime costs through behavioral changes induced by employment. The problem is tha t the behavior of many, probably most, inmates is made worse by imprisonment. Indeed, the US penal system has all but given up any pretense that its mission is to reform prisoners; rather, US justice revolves around punishment. Western and Beckett (2000) have estimated that a spell of incarceration reduces the probability of employment by about one-fifth. In other words, it would be far better to avoid incarceration in the first place.
A further disconcerting problem associated with prison labor, however, is the probability that it will displace other low skill workers, some of whom will engage in criminal acts and become incarcerated. On reasonable assumptions, the gains from reduced recidivism and greater prison production may be exceeded by the costs from displaced nonprison labor. Unless society can guarantee that a sufficient supply of jobs will be made available to all low-skilled workers--whether in prison or out--it will always be questionable whether the net benefit of prison labor to society is positive.
Conclusions and Policy Recommendations
In conclusion, Clinton's view that the "rising tide" has "lifted all boats" appears to be unjustifiably optimistic. Unemployment rates and even employment rates overstate the degree to which employment has increased across the board because they exclude the institutionalized population. Once we include those who are "out of the labor force," and particularly those who are incarcerated, a substantial number of prime age males have been left behind. Like Karl Marx, Alan Greenspan has argued that a sizable population of unemployed persons is required in an entrepreneurial economy in order to keep workers "insecure," acting as a reserve army that threatens to take away their jobs (Wray 2000).
Thus, the unemployed are "useful" in the sense that they hold down demands for better wages and working conditions. However, a large segment of those without jobs cannot serve this function because they do not represent a plausible competitive threat to the employed.
Still, the deprivations suffered by this segment do help to "discipline" the working class, who can fear that they might be only a few missed paychecks away from joining the "lowest of the low." Further, hostility and frustration of the employed over their low pay and poor working conditions can be diverted toward this disenfranchised segment of the population--creating a justification for punishment and high rates of incarceration even as it generates support for rising expenditures on "criminal justice." As the number within prison rises, more jobs are created for caretakers of the prisoners, of their families, and of parolees. Those released from prison use their enhanced criminal skills to perpetrate crimes, which generates support for more police, more 'justice," and longer prison sentences, all in a "virtuous cycle" reinforcing manner. The problem with this approach, as recognized by Marx and examined at length by Darity is the huge "deadweight losses" suffered by the affected individuals as well as by society at large.
Is there a way out? In recent years there has been growing support for a nation-wide program of public service employment (PSE) that would guarantee a sufficient number of jobs for all who are ready, willing, and able to work (Wray 1998; Forstater 2000). The target population for the PSE program would be the low-skilled, poorly educated population at greatest danger of becoming part of the "surplus" population. It is somewhat ironic that there is a movement to employ high school dropouts who are incarcerated, but there is no concerted effort to provide jobs for the "pre-prison population"--the portion of high school dropouts who are not (yet) in prison. If it is true that prison employment reduces recidivism (by 3 percent-20 percent reduction), increases chances of obtaining jobs after release (by up to 20 percent), and reduces probability of committing crimes upon release (by up to 20 percent) in spite of all the negative influences on character (actual and perceived) of serving time in prison, then employm ent outside prison should be even more effective at accomplishing such social benefits.
In the absence of universal access to employment, increased employment of prisoners will inevitably displace low-skilled nonprison labor. Focusing on employment of prisoners misses the main problem, which is lack of employment opportunities for young males who do not attend college. Certainly, I do not mean to suggest that it is simply lack of employment opportunities that forces young men to turn to a life of crime, nor do I believe that increasing the number of jobs available to the "pre-prison" population of young male dropouts will resolve the United States' crime, race, employment, and poverty problems. However, I believe that a first step toward a solution would be to create a public service employment program that would stand ready to hire all who are ready, willing, and able to work.
The author is Professor of Economics and Senior Research Associate at the Center for Full Employment and Price Stability, University of Missouri-Kansas City, USA, and Visiting Senior Scholar, Jerome Levy Economics Institute. This paper was presented at the annual meeting of the Association for Evolutionary Economics, New Orleans, Louisiana, USA, January 5-7, 2001.
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Publication information: Article title: Did the Rising Tide Eliminate Our "Surplus Population?. Contributors: Wray, L. Randall - Author. Journal title: Journal of Economic Issues. Volume: 35. Issue: 2 Publication date: June 2001. Page number: 525. © 1999 Association for Evolutionary Economics. COPYRIGHT 2001 Gale Group.
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