The cushion  has largely been created by the entry of more women into the workforce

Unemployment has hit double digits in the U.S., and in some areas of the industrial Midwest, it is approaching 16%. Joblessness in many parts of this country is destructive beyond belief. The Federal Reserve Chairman said he sees little prospect of immediate relief.


And yet, in other areas it is not nearly as bad as it could have been. One reason is that bringing home a paycheck, especially in upper-income households, is a shared responsibility today. That fact alone, in a recession, can provide a lot of families with a built-in backstop–an Unemployment Cushion–to the destitution that unemployment in a recession can cause.

In the last 50 years, job growth has far outstripped population growth. As a result, today’s 10.2% unemployment rate leaves a far greater proportion of the population at work than in the past. In 1961, for example, when we hit 7.1% unemployment, the record for that period, only a third of Americans had jobs. Today, even with 10% unemployment, nearly half the country, or 138 million people, is still at work.

Fifty years ago, of the 180 or so million people in the U.S., about 65 million were employed. That meant that every job in America basically supported three people (or 2.8, more precisely). The labor force was 67 percent male; barely one-third of U.S. women worked; and 49 percent of American households had at least one child of their own under 18. So when the breadwinner lost his job, it devastated his dependent, and often sizeable, household.

These days, the picture is very different. Just before the recession hit in 2007, of the 307 or so million people in America, about 146 million were working. Nearly half were women; and by 2008, the fraction of households with their own under-18-year-old had fallen to 31 percent. In other words, the number of people maintained by each job in America had dropped nearly 30 percent, to just over 2.0. So each job loss affects nearly one fewer person on average than in 1960.

If men had still been the only breadwinners in most families, this recession would have been a lot worse in terms of leaving more families with no means of support. It is this spreading of risk across the whole household that is giving us a cushion we would not have had in 1960, and the families protected the most, not surprisingly are the upper income married professionals–especially if they are not in the finance or automobile sectors. Of course being reduced to one paycheck is not a total cushion, but living for a while on one very stretched income is still a lot better than living on no income at all.

The cushion, of course, has largely been created by the entry of more women into the workforce. Moreover, this is the first recession in which men (heavily concentrated in finance and manufacturing), not women, are getting more of the pink slips. In fact, for the first time in history, women have almost overtaken men as the majority of the U.S. workforce – and may do so soon. They also comprise the majority of students in college, and many of the professional schools.

But what’s really interesting about the Unemployment Cushion is that it underscores the compounded economic protection afforded by both higher education and pairing off. While unemployment for college graduates has more than doubled, it still stands at 5%, less than half of unemployment for high school grads (11.2%) and a third of that for non-high school grads (15.5%). And doctors are more likely to marry lawyers than they are bricklayers: college grads tend to marry college grads. So the more you make, the more your spouse is likely to make, giving highly educated families a double economic edge, both in and out of recessions.

Indeed, with college-educated workers facing only 5% unemployment now (up from 2% in 2007), the chances of finding a double-professional household with zero income is only 1 in 400. These dual-income families are the ones still heading to the mall every weekend: that is, possibly the only ones with the consumer purchasing power to lead us out of the recession. They are tipping the economic balance even further in favor of areas of the country with a high proportion of double-wage-earning professionals, places like Seattle, or Washington D.C.

But there has also been a surge in single-woman heads of households, especially as a result of divorce. If you are a single woman with children, you are facing tougher odds and more severe risks. While your paired-off friends have spread their risk, dropping their number of people maintained by their paycheck to two or fewer dependents, you have taken on the single-earner responsibility borne by men in the 1960s. Indeed, even if you have a college education, and your chance of having zero income is 1 in 20, that’s still a lot bigger than 1 in 400. Unless you have substantial networks of support from extended family and others, you are utterly without a cushion, aside from government, or your own savings.

The riskiest place to be, of course, is in the Midwest and in manufacturing jobs. Being paired off and sharing responsibility won’t help as much there if you are both employed in one of the devastated sectors, because they are likely to lay off both of you.

Some of the smartest people at the biggest firms caused this economic crisis with a faulty analysis of risk, so it is ironic that this analysis shows how the well-educated double-wage earning couples have the greatest insulation from its effects. No one is completely immune, but those couples’ 1-in-400 chance of having no income stands in sharp contrast to 1-in-6 chance of a single mother in the Midwest, who could be facing foreclosure and destitution. It’s also a pretty good road map on how to protect yourself and your kids against the next recession: get a college degree and pair up with a college-educated partner.

Via Wall Street Journal