Unemployment numbers don’t tell real struggles of US families

Monthly unemployment figures have long been the barometer of America’s economic health. Unfortunately, they fail to tell the real story of the economic pressures experienced by American families, conditions that are rife with employment insecurity that constrict and ultimately threaten the American dream.

It is time for a new measure of economic health, one that takes into account a new national climate that has been changed by technology, labor practices, globalization and cataclysmic events such as the Great Recession and its seemingly bounce-less rebound for low- and middle-income Americans.

To truly understand the economic stability of American families, we need a measurement that better links parental employment insecurity to family income. My colleague Jeffery Napierala and I have developed the new “Index of Parental Employment Insecurity” to do just this and provide a better reflection of the realities today’s families face.

The Index of Parental Employment looks at two additional factors beyond simple unemployment: hidden unemployment, as defined by a parent who wanted and was available for work but believed that jobs were not available, or he or she didn’t qualify for an open position; and underemployment, as defined by working part-time but wanting a full-time job.

When we look at the well-being of families through this new lens, we discover that many middle- and lower-income families have experienced high rates of parental employment insecurity and income inequality since 2000, eight years before the Great Recession. The recession brought additional large increases in employment insecurity and income inequality for such families. By March 2015, children in middle- and lower-income remained at or above the already high levels of parental employment insecurity experienced in 2000. By the end of 2014, they had family incomes 10 percent to 22 percent below their historic peak in 2000.

{mosads}Clearly, the unemployment rate may be going down to pre-recession levels, but parental employment insecurity remains high among middle- and low-income families. These conditions have an overwhelmingly negative effect on the investments parents can make in their child’s development and, by extension, to promote upward mobility in the next generation.

Income losses for middle- and lower-income families are important because they limit parents’ financial ability to invest in their children’s development. Research shows that increasing income inequality between 1994 and 1995, and 2006 and 2007, was associated with a decline in parental spending on children both in the number of dollars spent by families in the bottom 50 percent of the income distribution, and as a percentage of total income for families in the bottom 70 percent of the family income distribution.

Without the ability to invest in experiences and goods that build human and cultural capital — higher-quality early care and education, residence in neighborhoods with better schools, nutritious food and healthcare, and other activities that foster emotional and cognitive development — we put our children’s future at risk by not ensuring that they have the skills to compete in school and in the marketplace later in life.

While it is unlikely that U.S. policymakers will be able to reduce income gaps, they can effectively reduce resource gaps in access to early childhood development through tax reform that is being proposed by the president and Congress. Policies that determine eligibility and benefit levels based on annual income can address the large, long-term income declines experienced by families since 2000.

Specifically, there are currently three major policies in the federal tax code — the Personal Exemption for Dependent Children, the Child Tax Credit and the Earned Income Tax Credit — that provide substantial economic resources to families by helping them invest in their child’s early development. By revising both the eligibility rules and benefit levels for one or all of these programs, policymakers could partially or fully offset the income declines between 2000 and 2014, reducing the associated economic stresses and consequences for families across the country.

As policymakers look to strengthen families through changes in public policies, they need to look at all of the factors that impact the economic health of families and enact policies that can address the large, long-term income and opportunity declines experienced by middle- and low-income families.

Donald J. Hernandez is a professor of sociology at Hunter College and the Graduate Center, City University of New York.

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