We finally have recovered most of the jobs that were lost in the Great Recession. Politicians and public-policy makers are celebrating the fact that unemployment is under 5%.
However, the Great Recession primarily wiped out the mid-wage jobs, and the strongest growth during the recovery has been in low-wage jobs.
The National Employment Law Project found in 2012 that 58% of the recovered jobs were in low-wage occupations, with median hourly wages from $7.69 to $13.83 an hour. Mid-wage occupations, with median hourly wages from to $13.84 an hour to $21.13 per hour, were the big losers—60% of all jobs lost in the recession. The higher wage jobs, from $21.14 to $54.55 per hour, lost 19% during the recession, but have recovered 20% and are doing well. In essence the poor economy has replaced good jobs with bad ones.
Today’s jobs report indicates that this trend continues.
Further, the Bureau of Labor Statistics data shows that there are 7.9 million people still unemployed. Another 2.1 million are long-term unemployed (those jobless for 27 weeks or more), while 1.7 million people are considered marginally attached to the labor force, and 6.1 million people are involuntary part–time workers.
So is the economy really recovering?
Five percent unemployment sounds great, but when you add it up, 17.8 million people need a job or want a better job. I don’t think it is time for a celebration. These numbers made me want to look deeper into the statistics coming out of the recovery.
This recovery is defined by the loss of mid-wage jobs in construction, manufacturing and other industries that offered family-wage jobs. The result is that the middle household income declined from $55,627 in 2007 to $51,017 in 2012. Workers who had mid-wage jobs before the recession and were laid off have been forced to take jobs in food services, retail and other low paying or minimum-wage jobs.
The NELP report notes that durable manufacturing, with growth of its mid-wage occupations, has been “one of the key drivers of the U.S. recovery,” but also that it is not showing enough growth to offset the greater number of low-wage jobs.
This trend of low-wage jobs growing faster than mid-wage jobs is not just bad for middle-class workers, it is bad for the economy.”
This trend of low-wage jobs growing faster than mid-wage jobs is not just bad for middle-class workers, it is bad for the economy. American workers no longer make the wages they need to buy all of the products and services America can make. They don’t have the purchasing power to energize our consumption economy, which has led to low GDP growth and low investment in manufacturing plants and equipment.