American Workers, Divided
New research from the Economic Policy Institute reveals that, now more than ever, American workers are divided into one of two categories: employed and overworked, and those struggling to enter or re-enter the workforce.
The report, written by Valerie Wilson, EPI director of the program on race, ethnicity and the economy, and Janelle Jones, an economic analyst, examines data on trends in the proportion of workers considered non-earners, and prime-age workers’ annual work hours from 1979 to 2016. Prime age refers to men and women between the ages of 25 and 54 years; non-earners comprise prime-age adults who haven’t worked for an entire year.
Wilson and Jones dial down the data further to examine racial, ethnic and gender disparities in the labor force data. They introduced a measure of “labor market disconnection,” separate from the Bureau of Labor Statistics’ Labor Force Participation Rate, which reveals the percentage of prime-age non-earners. From this they summarized reasons, based on gender, race and ethnicity, why non-earners weren’t working. Most of the reasons, note the pair, could be mitigated by HR leaders and revamped employment policies and benefits.
“We conducted this study to examine how work hours changed over the last 40 years as wages have been stagnant for the vast majority of workers,” says Wilson. “We also wanted to have a better understanding of employment and unemployment—something that went beyond the dichotomous measures (employed vs. not employed) reported each month. We wanted to understand these trends overall as well as how they varied for different demographic groups.”
Wilson and Jones found rather dismal data. Since 1979, prime-age adults worked 7.8 percent more hours per year in 2016. The reason for this is most apparent in low-wage earners who may need to work more hours or at multiple jobs to survive—especially in an economy of flat-lined compensation.
According to Wilson, “With wages practically stagnant, almost all of the growth in annual earnings that we’ve seen since 1979 has been because people are working longer hours. Unfortunately, with a fixed number of hours in a day—and with workers given little control over their schedules—there are limits to how far people can boost their annual pay by working longer hours.”
Not surprisingly, the data are unfavorable for men and women of color, who are more likely than their white colleagues to be disconnected from the workforce, working more hours and/or among the bottom 40 percent of wage earners. For example, there are significantly more Hispanic and black men in the bottom 40 percent of earners than white men (53.2 percent, 49.5 percent and 29.9 percent, respectively) with similar disparities among women of color and white women (48.6 percent, 40.2 percent and 27.8 percent, respectively).
In 2016, more than half of all non-earning men reported being out of work involuntarily (disability, illness and inability to find work), the greatest portion among black men (68.3 percent vs. Hispanic: 55.8 percent and white: 59.1 percent). The second most-common reason shifts among the races: black men reported being unable to find work, Hispanic men reported taking care of family and white men reported going to school.
More than one-quarter of black (25.1 percent) and Hispanic men (26.5 percent) reported working part-time for economic reasons (someone who wants and is available for full-time work) as compared to white men (14.8 percent). Based on the data and trends that occurred, particularly after the Great Recession in 2000, Wilson and Jones conclude that these men would be working more hours if they were available.
Wilson adds, “One of the main findings in our report is that low-wage workers increased their annual earnings primarily by working more hours, as opposed to receiving regular pay increases. I think this challenges some stereotypes about low-wage workers being unmotivated or lazy, but rather shows how incredibly hard-working these workers are.”
Wilson and Jones say their research highlights the need for employers and HR leaders to examine why there’s such a large share of “disconnected” workers and then develop new ways to reach or address the challenges faced by these potential workers. Measures could include greater access to affordable childcare (or elder care), transportation services or before-tax transportation contributions and getting rid of non-compete clauses.