Harvard Profs Reflect on ‘New Poor’

Harvard economists note disproportionate effect on working class

Despite the apparent improvement of the fiscal climate, the number of Americans facing unemployment continues to rise—and several Harvard economists shared their insights on its ramifications for the jobless.

The New York Times reported on Saturday that individuals who formerly enjoyed the comforts of a middle-class lifestyle—dubbed the “new poor”—are now on the brink of poverty and subsisting on savings, unemployment benefits, and various forms of public assistance.

The recession has disproportionately affected “men, workers from goods producing industries, young workers, and non-college workers,” according to Economics Professor Lawrence F. Katz’s prepared testimony for a Congressional hearing about the road to economic recovery.

There is a connection between the education level of workers and the economic downturn’s effect on their employment status, according to Christopher L. Foote, visiting economics lecturer.

Expanding on this theme, Senior Economics Lecturer Jeffrey A. Miron said that he is not worried about the job prospects of Ivy League graduates because the “top of the pecking order” will have more job options as a result of their elite backgrounds in education.


But blue collar workers and those without higher education will have to wait longer for employment opportunities, according to Miron.

In addition, if people remain unemployed for a long period of time, they will “get poor, suffer, and be more willing to consider jobs that are not their ideal jobs,” Miron said.

Since December 2007, around the start of the recession, employment has fallen by 8.4 million jobs. The unemployment rate continued to rise during 2009 despite a stabilization of the job opening rate, according to Katz’s report.

As a result of the increase in the unemployment rate, the amount of public assistance necessary to help the jobless has risen—which has played a role in the United States’ ballooning budget deficit, according to Miron.

But Foote said that the problem of public assistance for the unemployed is not as serious as most suggest.

“We’ve had recessions in the past,” Foote added.

Some labor experts have mentioned the “powerful expansions” that generally follow economic downturns of great magnitude—but there remain doubts that hiring will be able to absorb the millions of unemployed people, the Times reported.