Research Findings

Why employment isn’t a good indicator of economic well-being

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May 5, 2019

As expected, President Trump touted the “hottest” economy in years in his State of the Union address. As evidence for a booming economy, Trump noted that, “Unemployment has reached the lowest rate in half a century. African-American, Hispanic-American and Asian-American unemployment have all reached their lowest levels ever recorded.” And that “All Americans can be proud that we have more women in the workforce than ever before.”

Let’s focus on a minority group with historically low rates of employment — people with disabilities — and examine some of these claims. Employment rates for people with disabilities have declined since the late-1980s. An analysis of employment trends over time also shows similar declines even when accounting for differences in age, education, and family background. Despite these overarching trends, the President claimed in his address that “Unemployment for Americans with disabilities is at an all-time low.”

To be sure, many organizations have fact checked Trump’s SOTU speech. True: unemployment among people with disabilities did decrease slightly from 10.5% to 9.2% in 2017 and rates are lower for other minority groups. This isn’t, however, a record low nor did Trump mention that unemployment among people with disabilities is still about twice as high as the rest of the population.  It also masks the fact that while unemployment may have declined, it is still highest among African Americans and Hispanics with disabilities.

The bigger problem isn’t the hyperbolic tone we’ve come to expect in a SOTU address and especially one delivered by Donald J. Trump. It’s trying to convince American voters that the economy is doing well because of increased employment.

Do low unemployment rates actually mean that people are doing better? The answer to this question is, of course, more complicated than political speeches make it. According to the Bureau of Labor Statistics (BLS), to count as unemployed, a person must be jobless, actively seeking work, and available to take a job. If a person is not actively seeking work (for instance, someone who has given up on trying to find a job) they are classified as out of the labor force and not included in the unemployment rate.

Measures in question

People with disabilities are significantly less likely to be in the labor force. According to the BLS, 8 out of 10 people with a disability are out of the labor force. While a large number of disabled Americans have given up looking for work altogether, there are those considered marginally attached to the labor market whereby they have sought a job in the last year but were unsuccessful– the so-called “discouraged worker.”

As an alternative measure, the employment to population ratio does include people who are not in the labor force. In 2017, the employment-population ratios rose for both persons with a disability (29.3%) and those without a disability (73.5%). However, having less than one-third of people with disabilities working indicates a more systematic issue.

These measures also obscure working conditions. For many workers, having a job is not a ticket out of poverty. These workers, also known as the working poor, are often “underemployed,” working in jobs with low-pay and limited hours that often require far less education than they obtained.

Earnings disparities matter

When they do work, people with disabilities earn considerably less than their counterparts without disabilities. In 2017, the average worker earned $53,000 while a worker with a disability earned only $40,000. Earnings were also lower for people with cognitive disabilities and multiple disabilities who made approximately $31,000 in 2017. Earnings disparities have remained fairly constant for people with disabilities since the late-80s.

An important reason for these lower earnings is that workers with disabilities are clustered into lower paying service jobs and less likely to be employed in higher paying professional and managerial jobs. Disabled Americans often work in so-called “bad jobs,” characterized by low pay and precariousness. Those who make it into higher paying work still tend to be underemployed and overqualified for the jobs that they end up in.  As a result, many people with disabilities who are working still fall into poverty.

Poverty rates remain quite high among people with disabilities, and they are much higher when we consider membership in other marginalized groups. Recent research shows that poverty rates tend to be highest among less-educated minority women with disabilities. They earned the least income, and relied on government sources, as opposed to savings or wages, for most of their already limited income. Disadvantage was particularly apparent among persons identifying as Non-Hispanic American Indians or Alaska Natives. 

Ways of improving economic wellbeing

So even though employment income significantly contributes to economic wellbeing, it represents only one aspect of economic security. People also rely on income from different sources like money in savings accounts and pensions, government transfers through public assistance programs and SSI, and support from family members to make ends meet. Having money in your savings account can provide important added stability, particularly in times of economic distress.  

Given our current political climate, what we should be concerned with are efforts by the GOP and the administration to undermine the very policies meant to improve the economic wellbeing of disabled Americans, including the landmark Americans with Disabilities Act that garnered so much bipartisan support in the late-1980s. Or, the constant threat of cutbacks to disability benefits that provide some minimal amount preventing people from falling into total destitution. Or, by reforming Medicaid such that funding favors nursing home care over in-home care denying people with disabilities participation in their communities.

Read more:

Michelle Lee Maroto and David Pettinicchio, “Twenty-five Years After the ADA: Situating Disability in America’s System of Stratification,Disability Studies Quarterly 2015.

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