9/04/2012

Not only have the total number of jobs fallen, but what jobs are being created are low paying ones

There are still over 316,000 fewer jobs than when Obama became president.  What has grown are temporary service sector jobs -- we have 892,000 fewer permanent jobs than when Obama became president.  People have also noted how family income has fallen.  While that drop in family income might be occurring simply because of the drop in the number of people working, not surprisingly, wages have also been falling.  
“The overarching message here is we don’t just have a jobs deficit; we have a ‘good jobs’ deficit,” said Annette Bernhardt, the report’s author and a policy co-director at the National Employment Law Project, a liberal research and advocacy group. 
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. . . .
A copy of the National Employment Law Project report is available here

Meanwhile, the Cleveland Fed reports that the gap between output per hour and labor compensation is much larger than any time since WWII.  Since the recession hit, labor income share (compensation as a percentage of output) in the nonfarm business sector has fallen from 62% to below 58%.  There is no doubt that technological change and globalization have contributed to these trends.  The clearest path to mitigating these trends is better education and training programs as well as more investments by companies.

Obviously the key is worker productivity at the margin, which is difficult to measure.  The Bureau of Labor Statistics (BLS) reports average output per hour (which is higher than marginal output per hour) and has shown that wages and average productivity have diverged over the past two decades.  Is the gap due to the costs of greater regulation?  Are firms afraid to make permanent hires for fear that they may face large costs in firing these workers in the near future?

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