Inside Sources, September 13, 2016: Why We Need a New Focus on Work

“With unemployment at historic lows, one might conclude that work is not the problem. Wages must be too low or government benefits too stingy. But the unemployment rate can be misleading. It masks other serious structural problems that directly affect poverty. Too many workers remain underemployed and far too many are out of the labor market entirely. This is the primary challenge facing our country today, as Nicholas Eberstadt recently wrote. Both labor market participation (those who are working or looking for work) and employment rates (percent of total population who are employed) are well below where they were in recent years, which can’t all be blamed on demographics and the business cycle. The last two years in which the unemployment rates were as low as they are today (2000 and 2007), almost 84 percent of prime-age workers (25 to 54) were in the labor force. Today, that rate is only 81 percent. This lack of work directly impacts the poverty rate. In a recent report, I found that most poor working-age people do not work at all, and the vast majority of them are not even looking for work. A small fraction of prime-working age people in poverty work full-time, full-year, which means that for most, the lack of a full-time job, not low wages, seems to be the primary driver of poverty.”