The wage sage
From his perch at Northeastern University, Andrew Sum draws together data on everything from job and income growth to educational attainment to help us understand what is happening to American families and why. These days it's not a pretty picture.
Labor market and income statistics can be pretty dry stuff —until it’s in the hands of Andrew Sum. The director of the Center for Labor Market Studies at Northeastern University gets positively worked up over the world of work.
After getting his doctorate in economics at MIT, Sum landed at Northeastern in 1971 and has been there ever since. In 1978, he founded the labor market studies center, which has become one of the most widely cited sources nationally for information on what’s taking place in the labor market.
Recently, Sum and his colleagues have been highlighting the alarming collapse of the youth employment market and the particular toll the recession has exacted on men. He has also looked at the third-rail issue of immigration with an even-keeled approach that has highlighted the contributions of newcomers to the US and Massachusetts economies, but has not shied away from documenting the negative impacts of immigration on youth employment and the low-skills labor market.
At MassINC and CommonWealth magazine, we’re particularly familiar with Sum’s work. He and his colleagues at Northeastern have carried out several of MassINC’s most important research projects, including the inaugural report at the organization’s founding in 1996, “The State of the American Dream in New England.”
A son of working-class Gary, Indiana, the 64-year-old researcher comes at the issues of work and economic security with a passion born of his upbringing in a proud union town that has witnessed how economic convulsions can undo the fabric of communities and families. With an equal devotion to data and to the human faces behind the figures, Sum is an economist who manages to speak with his head and heart.
“There’s nothing dry about Andy’s work within what’s sometimes called ‘the dismal science,’” says Neil Sullivan, executive director the Boston Private Industry Council, a workforce development and education nonprofit that Sum has done studies with for more than 20 years. “He offers facts, figures, and a story that makes them all hang together. He creates stories with data that become our understanding of the labor market and the challenges facing the country.”
I sat down with Sum at his office at Northeastern to hear some of those stories. What follows is an edited transcript of our conversation.
commonwealth: We’re trying to climb out of this recession that’s been called the worst economic hole we’ve been in since the Great Depression. You’ve called it the Great Recession. What’s been the job loss to Massachusetts and the national economy?
sum: We’ve had higher unemployment rates than we’ve got now, but what makes it different is the fact that there are so many different dimensions to the problem besides the job loss. Before the recession, unemployment was running at about 4.7 percent. We doubled the unemployment rate in just a little more than two years. The rapidity with which that rate went up is shocking. What’s also made it so much different is that it’s so hard for anybody who’s unemployed to get reemployed. So, as a result, the length of time people are out of work has risen considerably. During the first four months of this year, the mean duration of unemployment here was about 35 weeks. That’s the longest duration we’ve had since the end of World War II. Nationally, you’ve got over 4 million people that have been out of work more than 27 weeks, and we’ve now got this all-time high of people out of work over a year.
You’ve also got this problem of a record number of people who are what we call underemployed. They’re working only part time even though they want full-time jobs, and this growing number of people who quit looking for work—what we call the hidden unemployed. There’s about 6 million people like that nationally. Finally, and this primarily affects people under 30, there is a group we call the mal-employed. They are working full time, but holding a job that doesn’t require the degree they have. A lot of young college grads are holding jobs, to be honest with you, that I could have filled when I was in high school.
CW: Just this morning the state announced that May was the fourth straight month of job gains here. They said we added about 16,000 jobs for that month. Sounds like good news.
cw: You’ve really been sounding the alarm on the big gender differential in the impact of the recession, the disproportionate toll it has taken on men.
sum: This is really bad. We were the highest in the entire country in terms of the ratio of male job loss from the end of 2007 through the end of 2009. There was nobody close to us.
cw: What explains it?
sum: Take a look at the sectors where we lost jobs: Construction, manufacturing, transportation. Those are the sectors where men have constituted a strong majority of workers. Construction is still 90 to 95 percent men. If you were a blue-collar woman, you also lost. But there are a lot fewer blue-collar women. Finance, where a large number of men are employed, also took a beating.
cw: There were hits higher up the earnings ladder, too, weren’t there?
sum: Males with bachelor’s degrees also lost jobs. The only men that were protected were those with master’s degrees or above. Among women, however, you had a different picture. During this recession, several sectors that we’re strong in added jobs: health, social services, education. Who holds those jobs? The overwhelming majority are held by women. Employment among college-educated women went up. So in Massachusetts, women’s employment rose during the recession. Men accounted for 165 percent of the job loss.
cw: How do you explain a 165 percent job loss?
sum: If you’re at 100 percent it means you account for all the job loss. But 165 percent means you not only lost all yours, but women gained.
cw: You’ve done a lot of work over the years, including reports for MassINC, that looked broadly at the Massachusetts economy, the workforce here, and, as several of our reports put it, the state of the American Dream. We’re a decade into this new century. Where do things stand compared to where we were 15 or 20 years ago in terms of the pursuit of the American Dream?
sum: If you went back to 1989, on just about every measure we did well: job creation, low unemployment, family income rising across the board, even among families headed by dropouts. We outgrew the country by a large margin. The income distribution did not grow that much more unequal. Gains were widely shared. Our teenagers worked at among the highest rates in the country. We had the best-educated workforce. We looked like the wave of the future.
cw: But things look very different today?
sum: Yes. If you look in general at states and ask who does well over the long haul, you generally find the better educated you are and the more literate you are, the better that state tends to grow, both productivity-wise and jobs-wise. So why are we at the bottom in job creation? I don’t know the answer to that. There are those people that argue that we’re not cost competitive, whether it’s labor or utility costs.
cw: How about housing?
sum: Housing costs do hurt us. But why is it that new firm creation is doing so poorly in Massachusetts given our capacity to innovate? We end up with a large number of patents. A fair amount of R&D. It all shows up everywhere except runs scored. I’ve said Massachusetts has the best uniforms, but we can’t even get a bunt single [in terms of job creation]. Back in the early ’90s, there was a tendency to say we’re not interested in smokestack industries. We’re going to build our base on finance and high-level services. And we downplayed a lot of our strengths in manufacturing and elsewhere. And other states tried to do a better job maintaining and retaining those jobs. We put too many of our eggs in too small a number of baskets, and what you’ve got is an overdependence on health care and social services.
cw: You have also put a spotlight on some big changes in family-formation patterns that are contributing to the income inequality we’re seeing. What has happened in this area?
sum: You have this pattern we call assortative mating. What it says is, the likelihood that you will marry someone of your same educational background is really high in the United States. A lot higher than when I was a kid. When I was a kid, you married someone who you went to high school with. That doesn’t happen anymore. What happens is college-educated women marry college-educated men. You get to the next group and they don’t marry [at nearly as high a rate]. And so you’ve got women with a high school diploma or less not getting married, with kids. You’ve got one earner with limited earnings. And that’s why you find the income distribution gap both here and across the country has increased massively since the late ’80s.
The out-of-wedlock birthrate in our state among women under 30 has risen unbelievably. In 2008, for the first time ever, over half the births to women under 30 in Massachusetts were out of wedlock. So you are creating the situation where more and more young children are being raised in single-parent families that are going to face severe income inadequacy problems. They cannot pay taxes, they cannot contribute to state and federal tax coffers, making it very difficult for us to balance our budget in the years ahead, and the problem has gotten worse every year since the late ’80s.
cw: In a recent paper, you refer to this as creating a “new demographic nightmare.”
sum: Yes, it is. These kids who grow up in these low-income single-parent families have basically no chance of making it in the modern economy. They have a very high dropout rate, very low college-attendance rate, very low college-graduation rate. These are kids we try to work with but they have everything going against them. At the same time, you have these kids who grow up in these middle-class, upper-middle-class families where mom and dad are college educated and do very well. These kids have everything going for them. So the gap between these kids is really going to create a serious problem for us in the state.
Let me give you two numbers to back up what I’m saying. You’re a ninth-grader in Lawrence, a Hispanic male. What are the odds that four years later you’ll graduate on time and you’ll plan to attend a four-year college compared to, say, a ninth-grader in Medfield or Dover or Sherborn? 8.8 percent. For the second group, it’s 97 percent—97 to 8! I’m really worried about our state becoming the uncommonwealth.
cw: A lot of what you’ve done is take things that may, broadly speaking, be self-evident to people—that education is closely tied to job market success and earnings, for example—and put hard numbers to it with things like comparisons of lifetime earnings based on education.
sum: What we try to do is illustrate the simple economics. If you are a male with a BA, you can expect to earn about $1.2 million more over your work life than a male high-school grad. A high-school grad will make in our state about $600,000 to $700,000 more than a high-school dropout over their lifetime. So if you compare someone with a BA with a dropout, you’re talking $2 million. What’s interesting is, the magnitude of that difference is a lot higher among men than it is among women, yet women are far more likely to go to college and far more likely to get a bachelor’s degree. About 140 women get a bachelor’s degree for every 100 men who get a degree. For associate’s degrees it’s almost 190 women for every 100 men.
Why is it that men don’t go to college and graduate at the rate women do? Women do a little bit better on reading tests, and they do a little bit better on the writing tests. But in math, men still do slightly better. When we’ve talked to men, what’s interesting is that they kind of weed themselves out very early, in eighth and ninth grade. They don’t take the courses that will prepare them [for college]. The gap is really big when you go to the central cities. It’s not so big when you go to the outlying suburbs.
cw: You’ve been working for years with the Boston Private Industry Council and the Boston Public Schools to track outcomes in the schools. One noteworthy report came out a couple of years ago that looked at the class of 2000 and their post-high school experience in higher ed. It was very sobering to see that even as the city was touting the college-going rates of its graduates, they were not faring well in higher ed, raising serious questions about how well prepared these kids are to complete a degree or a certificate, which is really the key to those higher earnings you’ve documented. It doesn’t do you much good just to say I enrolled and went to college, right?
sum: Getting out is key. In years past, we put a major priority on gaining access to the higher ed system. We’ve got to go beyond that. We’ve got to judge ourselves by how many people cross the finish line [with a degree].
cw: There’s been some pushback lately against the broad idea that everybody should go to college. Charles Murray [the conservative author] has been among those who have argued that there aren’t going to be enough jobs that require those degrees to justify pushing everyone into higher ed.
sum: Murray makes a number of good points. There are some points that I think he’s off on. But you can’t dismiss it because otherwise it’s kind of like a false promise to kids. I don’t think there’s anything worse you can say than, “Go to college,” and then these kids find they’re serving food. We have the best educated waiters and waitresses in the country here. Only New York City runs neck and neck with us. If students don’t tie what they’re taking [in college] with preparing for the world of work, and if we don’t develop really strong placement offices in colleges, we run this risk of a large number of people coming out without an ability to move into the [labor] market.
cw: There’s a lot of discussion about youth employment right now, in particular because it’s summer. We keep hearing about fewer and fewer summer jobs for teens, something that is especially worrisome in light of these horrible episodes of youth violence in Boston.
sum: Teenagers, both in the country and the state, are just finished. They’re working at the lowest rates since World War II by far. Over the first four months of this year, only 26 out of every 100 teenagers were working, nationally. If I took you back just to 2000, it would have been around 48. Same thing in our state. We were running at about 50 [out of 100] at the end of the last decade. In the first four months of this year, it was 23. It’s fallen by over half, and, by the way, when you look at who’s not working, the biggest decline is among males. Female teenagers work at a higher rate. It’s the only age group where women work more than men. In our state, the gap has gotten large. Part of it is, again, guys, who would have gone into construction, landscaping, manufacturing, get no jobs. If you’re in healthcare, social services, retail, things have stayed stronger. Women get those jobs and men don’t. If you’re at low income, you’re at the bottom of the heap. Add to that living in a single-parent minority family, and you’re at the very bottom of the heap. It’s about 8 percent employment. The higher your family’s income is the more likely it is that you work. Kids that work the most are those in families with incomes between $125,000 and $150,000. Nearly 40 percent work. If you are low income, it’s about 18 percent. When we ask the [better-off] parents, they say, “I want my kids to work,” but not because they need the money. They want them to earn the money. They want them to be responsible, to learn how to work with adults, and to appreciate the value of a dollar. That’s why middle-class families have more kids working. They also broker their kids into those jobs. If I ask kids, “How did you get the job?” they’ll often say, “My dad knew the manager.”
cw: You’ve done a lot of work on immigration, including a report for MassINC, pointing to ways that immigration to Massachusetts really saved us from seeing huge population losses in the 1990s and contributed a lot to the economy. But you’ve also looked at the impact of immigration on youth employment and lower skills employment. Has the immigrant influx of recent years been good or bad for native-born workers?
sum: We have mixed findings on this. There were immigrants who were major contributors to the state, job-wise and in terms of firm-formation and tax paying. Legal immigration is a net plus for the United States. Illegal immigration is a net negative. It tends to displace Americans from jobs, not at the high end, at the low end. The open borders are hurting people, including a lot of young, second-generation Hispanics. They get displaced and their wages get beat down.
cw: How much is this tied to the youth employment crisis we’re having?
sum: Youth are our biggest losers. The more new immigrants you have with limited schooling in your area, the lower the employment rate for kids.
cw: You’ve written that this dramatic fall-off in youth employment impacts the lifetime employment trajectory of young people. How is it that their experience as teenagers has implications for what their fortunes are going to be in their 30s or 40s?
sum: We use the term “path dependency” to explain it. All it says is, what happens to you today is very strongly influenced by what happened to you yesterday, and what you do today is going to influence what happens to you tomorrow. The odds of you and I working today are very much influenced by whether we worked last year. The same thing holds for teenagers. Show me a kid who works at 15, he’s going to be much more likely to be working at 16. So when you delay work among kids, what it means by the time they get to be 19 is they don’t have work experience. You’re going to earn less and you’re going to be employed less often. You also find that the more teens work in high school, the less likely they are to drop out of high school. It keeps them in. There is some research that says you can work too many hours. But when we looked at this for black men, the more you work, the better you did in high school and in terms of going to college. What a lot of the younger black guys say is, “Andy, do you know what it did? It taught me time management, how to organize my life.”
cw: What can we do to get our employment situation, especially for young people, back on track?
sum: I think what we’ve got to do is go back to something we lost sight of, and that is, you can’t keep giving all your jobs away, as we have in this country, to other countries. China and other countries have created these jobs largely by providing mass subsidies and then creating large economies of scale where you can take over the industry. We basically sold America out. We’ve got to help build our competitiveness and training opportunities there and in the other trades and green technology jobs. We’ve also got to put some dollars behind this. We’re not organizing this very well and that’s why people —we’re training them but they don’t have jobs to go to. We’ve got to do a lot more in moving kids more steadily into the world of work. I would have everyone at community college also be in a work situation. I notice a number of colleges have been asking their kids to show this on their résumé—don’t tell me you went and saved the whales or you went to China—did you work?
cw: You bring a lot of passion to issues that can sometimes seem like dry numbers. Your interest in work comes from some lessons from your own life growing up in Gary. What was that like?
sum: I worked since the time I was 11. I had a paper route [delivering the Gary Tribune]. I had 110 customers and those were the days you had to collect as well as deliver. It taught all these organization, financial responsibility, and management skills. By the time I was 16, I had done all this. Friday at 9 o’clock at night I’d be out there knocking on the door to get your money. I worked in a grocery store when I was 18, and then in the mill [at US Steel]. My father died when I was in high school. I helped my mom meet the mortgage. In those days, work in the mills allowed you to be a man. Now, Gary’s going through really tough times. What we’ve done is we’ve taken away men’s jobs from these kids. Now what they get are street values, peer values; they’re not values gained from learning to work with adults.
cw: One of the gifts you have is that, with all the charts and numbers you’re immersed in, you focus on using these data to tell stories.sum: You need to tell the stories because that’s what people mentally can grasp. All these numbers, I live with them every day, but then I ask my staff, “Okay, what’s our story?” Without those numbers you’d say it’s just an anecdote. I want to distinguish the anecdote from the reality.