The economy, the stock market and even the November elections will largely be determined by a group of people who are almost invisible to forecasters.
Economists, investment advisors and political strategists are closely watching the unemployment rate. But few commentators acknowledge just how faulty the employment statistics are. One key problem is that a crucial group of people can’t be tracked and measured. These are the so-called discouraged workers, who have given up looking for employment. They are the economic equivalent of astrophysicists’ dark matter – the particles scattered throughout the universe that can’t be seen but have enough mass to alter the course of everything we can see.Jaime Monfort / Getty Images
There have always been discouraged workers, of course, but the recent recession has multiplied their number. And it has enlarged a related category, as well, those who could be described as disgruntled workers – the underemployed, who have been forced to accept jobs with fewer hours or lower pay than they would like. These two groups aren’t counted in the unemployment rate either because they aren’t listed as looking for work or because they are listed as already working.
The uncounted include people who lost their jobs and spent months unsuccessfully looking for new ones until they finally gave up; women, and some men, who would like to work but have decided it makes more financial sense to stay home and care for kids instead; and teenagers who have not been able to find entry-level jobs. There are also older middle managers who have had to take early retirement even though they would prefer to continue working. To those groups, add anyone who lost a job and ended up having to accept a new one that was worse.
And why do these people matter so much? As I see it, it breaks down into three basic reasons…
The fact that the average American working woman earns only about 8o% of what the average American working man earns has been something of a festering sore for at least half the population for several decades. And despite many programs and analyses and hand wringing and badges and even some legislation, the figure hasn’t budged much in the last five years.
But now there’s evidence that the ship may finally be turning around: according to a new analysis of 2,000 communities by a market research company, in 147 out of 150 of the biggest cities in the U.S., young women’s median full-time salaries are 8% higher than those of the guys in their peer group. In two cities, Atlanta and Memphis, those women are making around 20% more. This squares with earlier research from Queens College, New York, that had suggested that this was happening in major metropoles. But the new study suggests that the gap is bigger than thought, with young women in New York City, Los Angles and San Diego making 17%, 12% and 15% more than their male peers respectively. And it also holds true even in reasonably small cities like Raleigh Durham, N.C., Charlotte, N.C., (both 14% more) and Jacksonville, Florida (6%). (See TIME’s special report on the state of the American woman.)
Troubling statistics have been rolling in lately about job losses. While the beginning of the recession saw the shedding of thousands of jobs en masse at major corporations, by the end of last year, job cuts were concentrated at small businesses. While financial aid aimed at small businesses continues to sit in the Senate, the Bureau of Labor Statistics reported 62 percent of cuts were at firms with less than 50 workers — the kind that provide nearly one-third of all jobs.
And those cuts hurt that business, and the economy, in ways big-company layoffs never will.
Small businesses will often cut to the bone before laying off longtime workers. Some have done furloughs, voluntary sabbaticals, pay cuts, deferred maintenance, marketing reductions — anything but pink-slipping workers. For many entrepreneurs with small staffs, those people have become like family.