Jobs Growing Slowly, Wages Falling Fast

Article posted on March 21st, 2011 by WhatAmIMissingHere

Stuckflation by Nate Beeler, The Washington Examiner

EDITOR’S COMMENT:  I feel that Robert Reich’s comments here about the American economy and the American employment situation were rather accurate. The average American worker, both employed and unemployed, is struggling. Unfortunately, as you know, I do not foresee a quick return to significant economic growth anytime in the near future. And, just as importantly, as Secretary Reich points, the outlook for pay and benefits for a large number of American workers is trending lower. Where Secretary Reich and I would disagree is the approach we would take to help resolve this struggle. His approach would likely emphasize more government efforts, including additional stimulus, while my approach would emphasize more private, non-government efforts.

As a result, I would respectfully agree with most of his article, but not his conclusions, as he has a tendency to blame conservatives for most of our economic problems.  In the spirit of providing balance to our site, I’ve included his most recent article.

By Robert Reich

Are we making progress on the jobs front? Just barely. And that’s not even the big story, which I’ll get to in a moment.

The Bureau of Labor Statistics reports 192,000 new jobs in February (220,000 new jobs in the private sector and a decline in government employment), and a drop in the overall unemployment rate from 9 to 8.9 percent.

It looks as if we’re heading in the right direction. But the progress is far too slow to make a real dent in unemployment. To get the unemployment rate down to 6 percent by 2014, we’d need more than 300,000 new jobs a month, every month, between now and then.

In some ways, we’re just treading water. The number of unemployed Americans – 13.7 million – is about the same as it was in January. The number working part time who’d rather be working full time – 8.3 million – is also about the same.

In other ways, we’re going backward. Millions of jobless Americans are no longer on the radar screen because they’ve stopped looking for work. The percent of the total workforce either in jobs or actively looking is at its lowest point in 25 years.

These job dropouts make the unemployment rate look far better than it really is. If the share of Americans who are either employed or seeking work was the same today as it was before the Great Recession, the current unemployment rate would be 11.5 percent instead of 8.9 percent.

But here’s the big story, and it’s especially worrying: Most of the jobs we’ve gained pay less than the jobs we’ve lost.

An analysis from the National Employment Law Project shows that the jobs created since February 2010 (about 1.26 million) pay, on average, significantly lower wages than the 8.4 million jobs lost between January 2008 and February 2010.

The biggest losses during the Great Recession were jobs paying $19.05 to $31.40 an hour. By contrast, the biggest gains over the past year have been jobs paying an average of $9.03 to $12.91 an hour.

In other words, the big news isn’t the slow return of jobs. It’s the drop in pay.

For several years now, conservative economists have blamed high unemployment on the purported fact that many Americans have priced themselves out of the global/high-tech jobs market. So if we want more jobs, they say, we’ll need to take wage and benefit cuts.

And that’s exactly what Americans have been doing.

Employers have been demanding wage and benefit concessions from their unionized workers and usually getting them. Detroit is creating auto jobs again – but new hires are getting about half the pay that autoworkers were getting before. Airline workers are taking home 30 to 50 percent less than they did years ago. And so on.

Conservatives say it’s not enough. That’s why unions have to be busted – and why some governors are seeking to abolish laws requiring workers to become dues-paying union members in order to get certain jobs. Hence the confrontations over the future of labor unions, especially in Midwestern states with Republican governors.

Millions of nonunion workers have also had to accept cuts in pay and benefits just to keep their jobs. Their health benefits have been slashed, their employer pension contributions dramatically cut, and their wages reduced or frozen.

Millions of other private-sector workers have been fired and then rehired as contract workers to do almost exactly what they were doing before, but now without any benefits or job security.

The current attack on public-sector workers should be seen in this light. The charge is that they now take home more generous pay and benefit packages than private-sector workers. It’s not true on the wage side if you control for level of education, but it wasn’t even true on the benefits side until private-sector benefits fell off a cliff. Meanwhile, all across America, public-sector workers are being “furloughed,” which is a nice word for not collecting any pay for weeks at a time.

At this rate, America’s unemployment rate will continue to decline. But so will the pay and benefits of most Americans.

Conservative economists have it wrong. The underlying problem isn’t that so many Americans have priced themselves out of the global/high-tech labor market. It’s that they’re getting a smaller and smaller share of the American pie.   (my emphasis)

By Robert Reich

By permission Robert Reich

http://robertreich.org

© 2011 Robert Reich

Robert Reich, former U.S. secretary of labor, is professor of public policy at UC Berkeley and the author of the new book “Aftershock: The Next Economy and America’s Future.”

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