The Blog of the Frances Perkins Center

Full Employment for the Rich – A Great Depression for the Poor

In Biography, Economics on March 2, 2010 at 4:36 pm

[Written by board member Leah W. Sprague]

Frances Perkins insisted upon accuracy when it came to depicting the plight of America’s working people.  In January, 1930, she challenged the political puffery of the Hoover Administration when Hoover’s Secretary of Labor announced that employment was on the rise and the coming year “should see us well on the road to complete recovery.” Perkins, then New York State’s Industrial Commissioner, was furious. She knew the prediction was wrong and confirmed that it was based upon comparisons using the seasonal bump in employment in the weeks preceding the Christmas holiday.

Frances Perkins had a penchant for avoiding publicity, but this time, she gathered the reporters and proceeded to debunk the Hoover Administration’s figures. December, 1929, represented the worst month of unemployment in New York since 1927, she said, and the worst December since the New York Department of Labor began collecting statistics in 1914. January’s unemployment would continue to rise.

When, in June, 1930, Hoover’s Secretary of Commerce announced that unemployment was only 3 per cent, Perkins pounced again. This rosy figure was based upon total census numbers and misstated the percentage of unemployed among the employable segment of the population, she said. Perkins pointed out that in seven New York cities, unemployment was 13 per cent, over four times that portrayed by the Hoover Administration. Perkins, by then an experienced observer of labor market conditions, was correct in forecasting that the worst was yet to come.  By 1933, when she was appointed Secretary of Labor, unemployment had reached 25 per cent.

A study released last month by Northeastern University’s Center for Labor Market Statistics[i] points out that the nation’s unemployment problem is not affecting all sectors of the population equally. Unemployment has hit families in lower income brackets far more adversely than those with higher incomes. Using data from the fourth quarter of 2009, Andrew Sum, Ishwar Khatiwada and Sheila Palma report that as income rises, unemployment decreases. In fact, for that segment of the population with household incomes greater than $135,700, unemployment is at 3.2 per cent, virtually full employment, while for those with incomes less than $12,600, the unemployment rate is 30.8 per cent. This holds true for underemployment, as well. Among the lowest income households, 20.7 per cent of the workforce is underemployed, while 1.6 per cent of those in the highest income bracket are underemployed.

The nation’s unemployment rate for January, 2010, is reported at 9.7 per cent. As this study points out, however, this number does not account for wide variations in the nation’s labor market. The authors conclude their analysis with a quote by Secretary of Labor Willard Wirtz in Congressional testimony in the late 1960’s. When asked how workers were doing “on average,” Wirtz replied, “When you have your head in the freezer and your feet in the oven, on average you are doing ok.”

At the Frances Perkins Center, we often ask, “What would Frances Perkins do?”  A proper analysis of labor statistics was central to Perkins’s assessment of conditions facing working Americans. Armed with this latest research, what would she say to the country?


[i] Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent, A. Sum, I. Khatiwada & S. Palma, Center for Labor Market Studies, Northeastern University, February 2010.

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