How Many Really Suffer as a Result of Labor Market

question 32

Multiple Choice

How many really suffer as a result of labor market problems? This is one of the most critical yet contentious social policy questions. In many ways, our social statistics exaggerate the degree of hardship. Unemployment does not have the same dire consequences today as it did in the 1930's when most of the unemployed were primary bread-winners, when income and earnings were usually much closer to the margin of subsistence, and when there were no countervailing social programs for those failing in the labor market. Increasing affluence, the rise of families with more than one wage earner, the growing predominance of secondary earners among the unemployed, and improved social welfare protection have unquestionably mitigated the consequences of joblessness. Earnings and income data also overstate the dimensions of hard-ship. Among the millions with hourly earnings at or below the minimum wage level, the overwhelming majority are from multiple-earner, relatively affluent families. Most of those counted by the poverty statistics are elderly or handicapped or have family responsibilities which keep them out of the labor force, so the poverty statistics are by no means an accurate indicator of labor market pathologies. Yet there are also many ways our social statistics underestimate the degree of labour-market-related hardship. The unemployment counts exclude the millions of fully employed workers whose wages are so low that their families remain in poverty. Low wages and repeated or prolonged unemployment frequently interact to undermine the capacity for self-support. Since the number experiencing job-lessness at some time during the year is several times the number unemployed in any month, those who suffers a result of forced idleness can equal or exceed average annual unemployment, even though only a minority of the jobless in any month really suffer. For every person counted in the month unemployment tallies, there is another working part-time because of the inability to find full-time work, or else outside the labor force but wanting a job. Finally, income transfers in our country have always focused on the elderly, disabled, and dependent, neglecting the needs of the working poor, so that the dramatic expansion of cash and in kind transfers does not necessarily mean that those failing in the labor market are adequately protected. As a result of such contradictory evidence, it is uncertain whether those suffering seriously as a result of labor market problems number in the hundreds of thousands or the tens of millions, and hence, whether high levels of joblessness can be tolerated or must be countered by job creation and economic stimulus. There is only one area of agreement in this debate-that the existing poverty, employment, and earnings statistics are inadequate for one of their primary applications, measuring the consequences of labor market problems. The author contrasts the 1930's with the present in order to show that

• A) more people were unemployed in the 1930's
• B) unemployment now has less severe effects
• C) social programs are more needed now
• D) there now is a greater proportion of elderly and handicapped people among those in poverty
• E) poverty has increased since the 1930's

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