Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
We’ve discussed this in the past but it’s been a long while since the subject was broached [Feb 3, 2011: CNNMoney – Jobs Coming Back, but the Pay Stinks!] [Sep 2, 2010: NYT- New Jobs Mean Lower Wages for Many] [Sep 4, 2009: Job Seekers Across America Willing to Take Substantial Pay Cuts] , and with a new study out it’s good to reiterate the complexion of the current “jobs recovery”. Obviously a lot of jobs were lost in the Great Recession across all income strata. And much like the recovery of early 2000s (which was called “jobless” for along time) this one has struggled to create jobs. More importantly, the jobs that are being created are unfortunately heavily focused on low paying work. Not to mention a lot of it has been temporary work. [Feb 16, 2010: USA Today – Use of Temps to Fill Jobs May No Longer Signal Permanent Hiring] Bottom line, 3/5th of the jobs lost were in “mid level wage” work, and only 1/5th of the jobs created since have been in that same group. Meanwhile 1/5th of the jobs lost were in the “low wage” area but 3/5ths of the job creation has been there.
So American certainly has an interesting dynamic – a lot of the high aggregate data looks fine, but at the risk of “class warfare” the benefits of the economy seem to increasingly be going to fewer and fewer (corporate profit margins at record highs, the share of profits
that go to capital versus labor at record high, corporate taxes as % of GDP at record lows, etc). While a massive federal deficit and government assistance programs are keeping an even keel at the current time, one wonders about the long term societal impacts as the middle continues to be hollowed out. And as investors who are focused on corporate profits it appears you can be more bullish in a “meh” economy versus how it used to be 10-15 years ago as much of the prosperity the economy does has accrues to the corporate class.
- While a majority of jobs lost during the downturn were in the middle range of wages, a majority of those added during the recovery have been low paying, according to a new report from the National Employment Law Project.
- The report looked at 366 occupations tracked by the Labor Department and clumped them into three equal groups by wage, with each representing a third of American employment in 2008. The middle third — occupations in fields like construction, manufacturing and information, with median hourly wages of $13.84 to $21.13 — accounted for 60 percent of job losses from the beginning of 2008 to early 2010. The job market has turned around since then, but those fields have represented only 22 percent of total job growth.
- Higher-wage occupations — those with a median wage of $21.14 to $54.55 — represented 19 percent of job losses when employment was falling, and 20 percent of job gains when employment began growing again.
- Lower-wage occupations, with median hourly wages of $7.69 to $13.83, accounted for 21 percent of job losses during the retraction. Since employment started expanding, they have accounted for 58 percent of all job growth.
- The occupations with the fastest growth were retail sales (at a median wage of $10.97 an hour) and food preparation workers ($9.04 an hour). Each category has grown by more than 300,000 workers since June 2009.
- Some of these new, lower-paying jobs are being taken by people just entering the labor force, like recent high school and college graduates. Many, though, are being filled by older workers who lost more lucrative jobs in the recession and were forced to take something to scrape by.
- Over the last few decades, the number of midwage, midskill jobs has stagnated or declined as employers chose to automate routine tasks or to move them offshore. Job growth has been concentrated in positions that tend to fall into two categories: manual work that must be done in person, like styling hair or serving food, which usually pays relatively little; and more creative, design-oriented work like engineering or surgery, which often pays quite well.
- Since 2001, employment has grown 8.7 percent in lower-wage occupations and 6.6 percent in high-wage ones. Over that period, midwage occupation employment has fallen by 7.3 percent.
[Sep 14, 2009: Global Wage Arbitrade at the Micro Level: Marvell Technology]
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