Low-wage job growth seen as hurdle to recovery

Posted Jan. 31 at 7:30 a.m.

There are two problems with the jobs recovery: Employers haven’t added enough jobs. And those they have added aren’t particularly good ones.

The former problem has gotten a lot of attention, with many economists and politicians talking about job growth averaging less than 100,000 a month last year, not enough to keep up with population growth or make a significant dent in unemployment.

But experts say the low-wage jobs that have been added are also a serious problem — putting downward pressure on wages and keeping consumer spending in check.

“Growth has been concentrated in mid-wage and lower-wage industries. By contrast, higher-wage industries showed weak growth and even net losses,” said Annette Bernhardt, policy co-director for the National Employment Project. She said that growth has been far more unbalanced than during previous job recoveries.

Bernhardt’s analysis of the first seven months of job growth in 2010 found that 76 percent of jobs created were in low- to mid-wage industries — those earning between $8.92 to $15 an hour, on average, well below the national average hourly wage of $22.60 in 2010.

She said a preliminary analysis of full-year results suggests the same trend is still holding true, although she cautioned that final employment figures are needed.

But the biggest problem is continued job losses in higher-wage industries severely hit by the bursting of the housing bubble — construction and financial services. Recoveries in those sectors helped lead the economy out of earlier downturns, but they’re still suffering more than a year and a half after the official end of the Great Recession.

That’s a big part of the reason high-wage sectors — made up of jobs that pay between $17.43 and $31 an hour — accounted for nearly half the jobs lost during the recession, but have produced only 5 percent of the new jobs since hiring resumed, Bernhardt’s study showed.

Even in some of the higher-wage industries that are hiring, it’s lower-wage occupations within the sector where the jobs are being added, according to William Rodgers, chief economist for the Heldrich Center for Workforce Development at Rutgers University.

Case in point: Professional and business services sectors gained a healthy 366,000 jobs in 2010. Workers in that sector earned $27.23 an hour, on average, in 2010. But almost all of the new jobs — 308,000 — came in temporary help services, where the average hourly wage was only $15 an hour.

And those temporary jobs accounted for nearly one in four jobs created by all types of businesses last year.

“This recovery is being driven very much by temp employers,” said Rodgers.

A big worry is whether the trend toward low-wage jobs will continue. Experts say it’s too soon to tell. And we’ll know more about wage growth and what types of jobs are being added when the government releases its January jobs report on Friday.

But the Bureau of Labor Statistics has made some worrisome projections about the pay for jobs likely to be created.

The BLS’s most recent job growth forecast, published back in November 2009 and projecting the job market from 2008 through 2018, identified 30 different occupations expected to experience the best growth.

The good news is that the occupation expected to add the most jobs over those 10 years — registered nurse — is considered “very high wage.” But the six occupations with the largest gains are all classified as either “low wage” or “very low wage.” Among those jobs are home health aides, food preparation — including fast food workers — and retail sales people.

Overall, 55 percent of the jobs growth forecasted in the 30 fastest-growing occupations identified by BLS, are considered to be low- or very low-wage.

But the greater number of low-wage jobs shouldn’t be a surprise, said Kristina J. Bartsch, chief of occupational outlook for BLS, simply because higher-wage occupations are always going to be in the minority. Some of the jobs projected to enjoy the fastest pace of growth are very high-wage.

For example, network systems and data communications analyst jobs are projected to have increase by more than 50 percent, but they are still only a small portion of the workforce.

“By and large, occupations that are more high skill, and have high wages, are fast growing,” she said. “They’re just not as huge as waiters and waitresses.”

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  1. Don Steele Jan. 31 at 9:31 a.m.

    Trips to the malls and witnessing the declining quality of merchandise carried is omen to what industry foresees for the future of many Americans who continue to spend thjeir way into a daily job loss lottery. Balanced trade is key to creating and sustaining the jobs necessary to reduce our deficits and make programs affordable and when industry, investors and government fail to help us achieve such we must react ourselves by retargeting our daily personal spending.

  2. Boy George Jan. 31 at 9:34 a.m.

    We are well on our way to be the Brazil of North America– 90% of the wealth in the hands of 10% of the population.

  3. CPines Jan. 31 at 9:59 a.m.

    THe lack of job growth in the financial services sector is due to several of the largest banks, J P Morgan Chase, Citicorp, and Bank of America, being in the top 25 companies that outsource jobs overseas ( but their CEO’s still received bonuses). A few years back, Chase stated that in the next fews years, 70% of their back room operations will be based overseas. I wonder how many of their former employees, in the tens of thousands, have found jobs that pay the same or close to what they were earning? I wonder how many of their former employees lost their homes because they couldn’t find a job or one that paid close to their old salary? It is just ridiculous when you see Bank of America’s name or Chase’s name as sponsors of marathons or the Lyric Opera, which I am sure cost big bucks, so you will think they are so concerned about the communities they are in. If they are so concerned, then keep the people that live there employedd and stop sending their jobs overseas!! THat’s how you can help the communities. Until we can stop companies from sending good jobs overseas, we will continue to see loss of good jobs. Maybe a penalty tax should be instituted for companies that send American jobs to China, India and Mexico, rather than tax incentives.

  4. marko Jan. 31 at 11:07 a.m.

    Dont kid yourselves, this is what they want. All the world’s global villagers earning equal pay. Some countries’ wages are increasing dramatically while ours are falling, in order to all be equal.

  5. 007 Jan. 31 at 11:36 a.m.

    Exactly, CPines and marko.

    I worked for a financial firm that got bought and the new company made no bones about moving I/T functions offshore to save costs. It’s almost 10 years later and I’m STILL making 15% less than what I was in 2002 (and when I started my current job it was at a 28% pay-cut from the old job).

    None of my costs went down accordingly, though……

  6. Harvey Wallbanger Jan. 31 at 11:42 a.m.

    Golly, does anybody really think somebody making $8.00 an hour can afford to buy a $200,000 house? With the big downward push on wages, there is not going to be an economic recovery and those in power need to understand that.

  7. Darius Jan. 31 at 12:32 pm

    There is more to a job than the wages. Everyone wants to make more money, but work also brings with it a dignity that is not found in accepting welfare or handouts. Lower pay jobs also can lead to promotions to higher paid positions within the same company as a person proves his or her worth.

  8. james Jan. 31 at 12:36 pm

    Consumers have to open up their wallets and start buying to get the economy moving again.

    Next time you go to Walmart or Target, check out the products and see where they are made.

    Don’t forget the politician who want to cut back on Social Secuirty and Medicare—–programs that the beneificiaries paid for and which government used the money to pay for its military programs and never put the money back.

    I would be impresed with whatever party said Congress and other politicians can only get whatever benefits are contained in whatever health program is in effect. Although it was a tragedy what happened in Arizona, would the aveage taxpayer get the same treatment? Politicians, military, school superintendents all “public servants” getting early retirement and full health benefits and then securing lucrative jobs in private industry. Is there any wonder the system is breaking down. People making low wages are expected to be taxed even more to pay for these outrageous perks.

  9. The dude Jan. 31 at 1:36 pm

    At least we are still lending money to the banks for free. There bonuses should help keep the economy going.

  10. JeanSC Jan. 31 at 2:27 pm

    The problem with this story is that the growth of low-paying jobs is presented in the passive voice regarding the employers. The truth is, it’s employers who make the decisions about how to distribute the work tasks among their employees, and how much to pay each one. I don’t think “sociopath” is too strong a word for many. When I studied Economics in college, we learned about the Iron Law of Wages. Look it up. I only wish we could pass a law requiring all employees to be started with what studies have found to be a true “living wage,” (per year, not per hour, and it’s a lot more than Federal Minimum Wage) and whatever a company has left over, can be paid to workers thought to deserve higher pay.

  11. Erik Jan. 31 at 2:54 pm

    Reading the article (and comments) reminds me how dismal the economic education is in this country.

  12. @Jean Jan. 31 at 3:25 pm

    Yeah, THERE is a brilliant plan to get companies to hire people. Why don’t YOU start a company and pay these wages to entry-level people?

  13. John Jan. 31 at 3:37 pm

    Want to open up some good paying construction jobs???
    You know the ones. Ashpalt, Concrete, roofing ect.

    Get our President to crack down on the illegals; instead of pressing for a “Path to Citenship” for them. And the “Dream Act” for their kids.

    Eisenhower and Hoover had illegals removed from this country, when they needed jobs for Americans.

  14. Luke Lea Feb. 1 at 12:44 pm

    Expect these trends to continue. For decades.

  15. Luke Lea Feb. 1 at 12:54 pm

    Or until appropriate policy responses in Washington. It is all about supply and demand. Of labor relative to capital. Of labor-saving technologies. Of trade with populous low-wage countries like China. Of massive low-skilled immigration from Latin America. Ergo, the answers are: shorter standard work week (30 with overtime), wage subsidies, higher taxes on capital income, international tax enforcement (in cooperation with our allies), tariffs on low-wage imports, a 1920’s style immigration time-out (to assimilate the 30 million unskilled immigrants we have).

    Education (except vocational education) will not solve the problem. Three quarters of the population will always make their livings with their hands and their feet. They will always be with us. It is a fantasy to think otherwise.

    The problem begins with the elite gateways to our institutions. They should be flash mobbed, shamed, their tax-exempt status removed, affirmative action for ALL insisted upon, and accused of being what they are: enemies of the people.

  16. Jodi Feb. 1 at 2:07 pm

    The state of the economy is indeed quite bad. Let’s hope it gets better soon.


  17. Chris Feb. 5 at 3:00 pm

    According to economic textbook theory, monetary policy of increasing the money supply is supposed to lower interest rates so that businesses (movers and shakers) can afford to hire (which creates jobs and lowers unemployment), and purchase fixed assets – machinery and equipment. However, during this recession, instead of hiring and purchasing and machinery/equipment, the movers and shakers are speculating in commodities, causing prices to soar. In the process, some big players are being hurt, e.g., powerful real estate lobby because of plunging real estate values, and world exporters, so the ball is presently in their court. Stay tuned.