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DC Fiscal Policy Institute Issues Report on Recession’s Effects

October 15, 2010

DC Fiscal Policy Institute

On Wednesday, the DC Fiscal Policy Institute released a report on the effects the recession has had on District residents.  The report notes, unsurprisingly, that unemployment has risen across the board.   Nonetheless, these spikes have not been felt equally across different groups.   Specifically, the recession has hit Latino, African American, young, and less educated workers the hardest.   The unemployment rate for Latinos rose from 4.7 percent in 2008 to 8.4 percent one year later.  For African Americans, the 2008 rate of 10.4 increased to 15.6 percent in 2009.  Yet the unemployment rate for Caucasians rose by little more than one percentage point, from 3 to 4.1 percent.  Among young workers, defined as those between 16 and 24, the unemployment rate spiked by a whooping 8.5 percent, from 13 percent in 2008 to 21.5 percent one year later.

The report also outlines several disturbing longer-term trends in the DC labor market.  For one, the unemployment rate of individuals with high school degrees (but no post-secondary education) and individuals who do not have a high school diploma are very close: 19 percent for the former and 20.3 percent for the latter.  In other words, merely completing high school has only a small effect on one’s employment prospects in the city.  On the other hand, those with a bachelor’s degree or higher, the employment rate only took a minor hit (-0.6 percent) from 2008 to 2009.

A second disturbing trend is the increasing wage gap between high-wage and low-wage earners in the city.  While wages have been on the rise for people at all income levels, during the 2008-2009 period, they rose only 1 percent for low-wage earners, while they rose 7 percent and 8 percent for median and high-wage earners, respectively.  This trend is not restricted to that one-year period, either.  In fact, high-wage earners have experienced a 29 percent increase in wages from 2000 to 2009, while the wages of low-income individuals increased by merely 11 percent.

The report concludes that in order to mitigate the effects of a job market that favors highly educated workers over those without post-secondary training, the District must widen opportunity for adult education and it must strengthen its enforcement of policies designed to encourage employment of city residents, such as the First Source agreement.

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