Unemployment and neighbourhoods

There are now a very large number of unemployed people in Europe. One in three people aged 15 to 24 is out of work and looking for work. There is less unemployment in Washington DC, overall, than in many other American cities but unemployment is sickeningly high in some areas.

You see, D.C. is divided into eight wards, and those areas with the highest concentrations of low-income and African American residents also face the highest unemployment rates. 1 in every 4 people in Ward 8 is out of work and looking for work, whereas only 2.5% of people in Ward 3 are unemployed.

What is the answer to this problem?

Many people would say that education is the answer. But a new report from the Centre for Economic and Policy Research shows why this might not be the case. They found that a third of people who are in low paid jobs have some college education and another 37% have a high school diploma.

Getting more formal education is no longer a guarantee of a job or a well paid job (although a college degree is still a very useful thing to have when you are looking for work.

Why?

Partly because education is a ‘positional good‘. To an extent it doesn’t matter what your objective level of education is for your job hunting prospects. What matters is how well educated you are compared with other people in the economy. Because so many people now have high school diplomas it does not have the cache with employers that it used to have.

What would happen if, through some miracle of public policy magic, we managed to get college degrees for all unemployed or low paid people in America? I am guessing a few things would happen;

1.College degrees would no longer be seen as an important qualification by employers.

2. Employers would find new ways of privileging some people over others (perhaps post-graduate qualifications) for work

3. There would be lots of unemployed people and people on low paid work with college degrees.

Does that mean that we just have to resign ourselves to the fact that some areas will have very high concentrations of unemployed people or people on low pay than others and all the problems that come with this in terms of crime, mental health and sense of community?

In both America and England this is in fact current government policy. Whereas in 2001 New Labour pledged to “narrow the gap” between the poorest neighborhoods and the rest of the country, there is no such commitment currently being pursued by governments on either side of the pond.

Instead politicians and policy makers talk about social mobility and expanding opportunities. The clear implication of this approach is that those few people who are able to take advantage of these opportunities and will literally become socially mobile and move on, out of neighborhoods with a high concentration of people with low incomes.

Meanwhile, those people who lose out in this new mobility rich world (warning: social mobility means your income may go up as well as down), will find that the only places where they can afford to rent or buy are neighborhoods with a high concentration of people on low incomes.

Perhaps this will always be the case as long as we have both;

1. A large number of jobs that pay low wages (currently, in the UK and the USA roughly 1 in four jobs are low paid, McDonalds and Safeway are two of the largest employers in DC, employing 15,000 and 10,000 people each)

2. Rent and house prices that are set by the market meaning that people are often paying to live away from neighborhoods with a large concentration of people with low incomes.

This is one of the reasons why an ‘economics first’ approach to regeneration is, as John Houghton writes, destined to fail.

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