Jobs Being Added Low Wage, Low Skill

Catherine Rampell's frontpage story from yesterday, A Sharp Drop In Job Growth Sows Concern, is worth reading:

American employers added an estimated 88,000 jobs to their payrolls last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since last June, and less than half of what economists had expected. 

It also was the start of a third consecutive spring in which employers tapered off their hiring after a healthy start to the year. Slowdowns in the previous two years could be attributed to flare-ups in the European debt crisis, but this time the cause is less obvious. The recent payroll tax increase or other fiscal tightening in Washington could be partly to blame for the sudden retreat in hiring, but neither seems to be showing up much yet in other relevant economic data.

The employment news is pretty much all gloomy:

The unemployment rate, which comes from a different survey, ticked down to 7.6 percent in March, from 7.7 percent, but for the wrong reason: because more people reported dropping out of the labor force (meaning they are neither working nor looking for work), not because more people were hired. 

The labor force participation rate has not been this low — 63.3 percent — since 1979, a time when women were less likely to be working. 

Baby boomer retirements may account for part of the slide, but pessimism about job prospects in a mediocre economy still seems to be playing a large role, economists say. 

“The drop in the participation rate has been centered on younger workers,” said Mr. Shapiro, “many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”

The jobs being added are low-wage, low-skill positions, often times temporary:

The latest report should quiet speculation that the Federal Reserve will take its foot off the monetary accelerator anytime soon, as some had suggested after a spike in hiring in February. Even before Friday’s numbers came out, though, Fed officials had expressed concerns about not only the pace of job growth, but the quality of hiring as well. 

“It’s important to look at the types of jobs that are being created because those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a recent speech. 

She noted that relatively low-wage sectors like food services and retail businesses had accounted for a large share of the job growth in the last few years; a report in August from the National Employment Law Project, a liberal advocacy group, found that a majority of jobs lost during the recent recession were in the middle range of wages, while a majority of those added during the recovery had been low-paying. 

In March, in fact, jobs in food services and drinking places accounted for the largest share of total American employment on record. Today nearly one in 13 American jobs is in this industry.

Ms. Raskin also expressed concern about temporary jobs, which account for a growing share of total employment. 

“Temporary help is rapidly approaching a new record,” said Diane Swonk, chief economist at Mesirow Financial, who noted that there was also a rapid increase in temp hiring during the boom years of the 1990s. “That of course means more flexibility for employers, and less job security for workers.” 

Perhaps more distressingly, 7.6 million workers who want full-time work can find only part-time work, and their missing work hours do not count toward the official unemployment rate. The number of such workers fell slightly from February, but is still about where it was a year ago. 

A broader measure of underemployment, which includes those reluctantly working part time as well as those who want jobs but have stopped looking, stands at 13.8 percent.

To add to this nasty list -- poor job creation; low labor force participation; and the jobs that are being created are temporary, part-time, low-wage positions -- is what should be considered, now that were four-plus years from the Lehman meltdown, structural long-term unemployment:

At the same time, long-term unemployment — joblessness lasting more than six months — has been a persistent problem ever since the recession ended in the middle of 2009. And it may be partly driven by the fact that many of the jobs available do not pay well enough to be worth taking. 

“This seems to be a long-term sleeper crisis too, as we think about long-term unemployed workers who are in midlife and older workers who are likely dipping into retirement savings in order to stay afloat,” said Christine L. Owens, executive director of the National Employment Law Project. “We’re setting ourselves up for somewhere, 10 years down the road, when a lot of retirees who didn’t expect to live in poverty are going to be in poverty.”

Then to truly disabuse yourself of any optimism regarding membership in the working class read Fred Magdoff and John Bellamy Foster's "Class War and Labor's Declining Share" in the March issue of Monthly Review. Whether measured by total compensation or wages, the share paid to workers as a percentage of GDP has been declining since the 1970's. This is illustrated by several charts Magdoff and Foster include in their article, one of which is below:

Chart 2. Wages and Salaries as a Percent of GDP

Sources: Salary and wages for all employees and private sector employees from Table 1.12, NIPA, BEA; GDP, FRED Database.

Regardless of the whether government was Republican or Democrat labor's share of wealth has declined. We did enjoy a period of full employment at the end of Cintontime which saw an uptick in earnings. Then another brief bubble-induced moment in 2006. But -- outside of the end of Clintontime -- it has been steadily downhill for working-class wages since the early 1970's.