Job Problems of the Poor

By Brand, Horst | Monthly Labor Review, October 2003 | Go to article overview

Job Problems of the Poor


Brand, Horst, Monthly Labor Review


Jobs for the Poor: Can Labor Demand Policies Help?

By Timothy J. Bartik. New York, Russell Sage Foundation, and Kalamazoo, MI, W.E. Upjohn Institute for Employment Research, 2001. 473 pp. $17.95/paperback.

Although the author poses the subtitle of his work as a question, he is clearly convinced that the employment problem of poor persons and families cannot be solved without a labor demand policy of, as it turns out, massive proportions. In adapting the working-age population to the requirements of the labor market, the United States has chiefly relied on supply-side policies, such as training, education, the earned income tax credit, and job development services at the local level. These policies have not been ineffective so much as expensive, and, more importantly, they have not contributed very much to resolving the poor's employment problem. The author's only precedent for the magnitude of a demand-side labor-market policy is the Works Progress Administration, which was created during the Great Depression of the 1930s, and at its peak gave jobs to 3 million persons. In arguing for a large-scale labor demand program, Bartik cites or develops some disturbing facts about the employment situation of the poor, basing himself mainly upon data on unemployment and rates of labor force participation.

Although the average unemployment rate declined to about 4 percent during the boom years of the 1990s, unemployment among poor Americans barely diminished (if Bartik's approach is followed). Labor force participation, which does not include working-age persons neither employed nor looking for a job, generally remained lower among poor persons than among their non-poor peers. They are less likely than the latter to hold full-time, year-round jobs. They also account for a relatively large proportion of high school dropouts or high school graduates who do not go to college.

In figuring the employment needs of poor persons 25-54 years old (the most active working-age range), Bartik begins by calculating the changes between 1979 and 1998 in the employment-population rates of high school dropouts and high school graduates without a college degree--classified by gender, race, and marital status. For males, these rates sharply decreased between the 2 years; for females, the rates generally rose somewhat, but they remained well below those for white (non-Hispanic) males in 1979 at the indicated educational levels. Bartik's norm for job creation of the poor are these 1979 employment rates--which, if attained again, would spell about 5.2 million additional jobs for male and unmarried female poor persons in their prime working age. Yet, this would not exhaust the employment needs of poor families: if every such (non-elderly) family had one breadwinner holding a full-time, year-round job, altogether more than 8 million additional jobs for the poor would be required at the indicated educational levels. The figure may be viewed as a measure of underemployment in the United States.

It is bolstered by such statistics as the unemployment rate among former welfare benefit recipients--31.4 percent in 1998; among blacks, the official rate was 8.9 percent, nearly twice the overall rate; and in 50 of the Nation's 329 metropolitan areas it was 6 percent or higher.

Moreover, Bartik reports, a large proportion of workers found themselves disadvantaged by an inability to match their low skills or lack of education to available jobs. Thirty-five to 45 percent of high school dropouts are estimated to have such "mismatch" problems. It is not clear, however, if jobs can be adapted to overcome these problems--unless unceasing efforts are made on the supply side of the labor market (as Bartik defines it). Be it noted that he does not by any means dismiss such efforts.

Jobs for the poor are jobs in the low-wage sectors of the economy. Will low wages lift poor workers out of poverty? To the extent that they do not, Bartik would supplement them by the refundable (earned income) tax credit; he also counts food-stamp entitlements and, for former clients of the welfare system, earnings disregards (which allow phase-ins of partial benefits to supplement earnings). …

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