There’s a big argument in the economic world over whether we’re going through a structural or cyclical situation for the economy and particularly unemployment. A structural unemployment situation would mean a mismatch between the job skills required and the job skills attained, the changes in technology leading to less jobs required, or some other factors that is leading to a disconnect between employers and employees. Cyclical unemployment means generally that the business cycle is at an ebb, demand is low and that we need more demand to bring back the jobs.
I am firmly in the camp of cyclical unemployment, which we know how to fix even if the fiscal and monetary powers that be refuse to do it. But there are some structural factors to how the economy is generating and parceling out jobs. By this I mean that higher-wage jobs aren’t created in America with the same frequency for those without educational advancement. Reasons for this include outsourcing, the loss of the manufacturing base, trade deals that move jobs overseas, increasing financialization, the blunted impact of unions, and the loss of good-paying jobs in the public sector. These all impact the kind of jobs that get created, although I still believe that with increased demand the economy can create far more jobs.
The National Employment Law Project has a paper out today that provides a pretty substantial set of evidence for this thesis. Called “The Low-Wage Recovery and Growing Inequality,” the report shows that the majority of jobs which have returned since the Great Recession have been low-wage jobs, as businesses hold more and more of the profits away from their labor force:
During the recession, employment losses occurred throughout the economy, but were concentrated in mid-wage occupations. By contrast, during the recovery, employment gains have been concentrated in lower-wage occupations, which grew 2.7 times as fast as mid-wage and higher-wage occupations. Specifically:
• Lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth.
• Mid-wage occupations were 60 percent of recession losses, but only 22 percent of recovery growth.
• Higher-wage occupations were 19 percent of recession job losses, and 20 percent of recovery growth.
NELP actually lists the types of jobs that were created in the low-wage sector. They include the largely service-sector McJobs we’ve all been dreading since the 1990s – retail sales, food prep, waiters and waitresses, office clerks, customer service representatives. Employment grows at the low end, then drops at the mid-range, and stagnates at the high end. There are a finite number of good jobs in the economy and everyone else has to flip burgers and sell shirts.
So associated with the need to get jobs back into the economy must be the urgent need to make those jobs carry a living wage, and provide opportunity for career advancement. The low-end service sector of the economy has become bloated as we eke out a service-based economy. The industrial base has been hollowed out, and there’s Wall Street at the top and everyone else bouncing along the bottom. Unless you care for our growing number of sick people or you sell numbers on a piece of paper to investors, you’re not making a lot of money in this economy. The vaunted information economy and Internet revolution isn’t cutting it.
It’s not like there aren’t possibilities for skilled labor to proliferate in America. I hear we have trillions of dollars in infrastructure needs over the next several years. Most of the associated jobs in that space pay decent wages. The public sector has been cut to the bone. Lots of mid-range jobs there. We need hundreds of thousands of new teachers. They need to be paid more money, as a teacher on stage at the Republican convention said (!) last night. We have an entirely new energy sector to stand up. Just boosting demand at all will bring back jobs like truck drivers and construction workers and real estate agents, all of which pay fairly well.
Catherine Rampell has more on this phenomenon. It’s not enough to say “I will create jobs” anymore, simply put.




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Glad you wrote about this David. I am starting to hear obama suporters brag about the jobs being created. They won’t mention many of these are low wage or temp jobs. We can do better but we have no FDRs in either dim or rethug parties.
there is an argument among people employed as economists because they’re fucking parasites with no connection to the real economy …
(ummm… for the sake of precision in my writing, should I have looked up the definition of “parasite” …? nah. )
out in the real economy, the studies would be useful if they were printed on that baby wipe charmin ass wipe stuff –
ummm … have family wage jobs been turnign into junk mart jobs during 3 decades of RayGun-ism and DLC Third Way yuppie scum lies ??????? wow! how goddam confusing!
rmm.
Here in California, due to the tremendous amounts of time activists put into the issue, the voters approved of legalizing medical marijuana. Then there were more weeks, and months and years of hearings about where the clinics that would distribute the Medical Marijuana could be located, how they would be taxed, who and how the product would be grown, etc.
Finally the clinics were up and running, and this industry offered up decent waged jobs. Plus no one asks you to take a drug test! You’d think this would be a “Big Problem Solved, Out There in California, Guys” between Obama and the other officials he talks to.
Instead Obama got the DOJ and The IRS to shut the clinics down, so now, only about 20 to 30 percent of those places are left. The state has now lost 3,800 decent jobs, and also tax revenue.
Not only that, but we have been told by local newspapers that soon there will be a program in place, where anyone having a prescription for marijuana can get it from a distributor or pharmacy over in the UK.
I totally believe that there is a systematic shut down of this nation in the works.
Think about most of the box selling stores that “Willard” started. There is Staples…which like many others took away your local “mom & pop” stationary stores and replaced it with people who would say it is in AISLE 7B with no benefits and minimum wage.
You got great service at your local store, but you were willing to pay a dime, quarter or dollar more. Then everyone told you the great savings at SAM’s CLUB or WALMART, TARGET, etc. So you drove 15 – 20 miles to save $20 and bought junk you didn’t need (shit the gas cost was worth it).
I am not patting myself on my back about it, but I supported the local mom & pop stationary store when I had my own firm (from attic startup to 40 employee success – except when they closed their doors one year before I sold my business).
So the issue is your choice also. Stay at a Marriott or stay at a little better service (more unique) hotel.
Europe has many examples how that works. But, America is better – only dumber!
Was it Ikea who closed a plant in Sweden to move it to the U.S. to take advantage of the low wage no benefits workers so profits would increase (not to be more competitive)? Welcome to third world America.
Lots of people thought they heard Mitt promise to create 12 million jobs. What he actually said was he would create
12 Brazilian jobs. He will buy a hotel there. He regrets the error.
The USA is a nation that is programmed to prefer quantity over quality.
To get more well-paying job creation rather than the current low wage ones under Obama (and potential low-wage ones under Romney), one of the candidates would need to propose a serious change in trade and outsourcing policy.
And neither party has any intention of doing that. The Republicans have pointed out with (sick) justification that even though Obama attacks Romney as an outsourcer to frame him in voters’ minds, he doesn’t actually propose to seriously crack down on US offshoring policy, or alter free trade policiies. And when you don’t have a manufacturing base, it pushes everyone else’s wages down too.
Infrastructure is a perfectly valid goal, but it’s not something you can build an economic strategy around over the long term. Even if you took a serious run at it, sooner or later, the roads will be paved, the tracks will be built and the bridges will be fixed. Then what? The fundamentals of the economy aren’t strong… and they’re not even weak. The fundamentals of the economy are in China.
Reforming NAFTA was another of those campaign promises that Obama failed to address, except by pushing for more FTAs.
I think you’re right on the money with this line of thought. Economists are trapped in a paradigm that sees overseas production as helpful to our economy, because of lower cost products. What they don’t see is that the loss of manufacturing jobs kills the wages of low and semi-skilled workers, who make up the vast majority of consumers (boy, do I hate that term).
Now you be right ’bout that. I know it doesn’t appear so, but, I’ve been around. Was a travel agent for 28 years. Been everywhere but Africa and Antarctica. No OTHER countries have an “ALL YOU CAN EAT BUFFET” but US!!
You got that right. I almost forgot THAT unfulfilled promise. Now he’s pushing for AFWTA, “All the Fucking World Trade Agreement”.
“I am firmly in the camp of cyclical unemployment”
I disagree completely. Our employment problems do not seem cyclical in nature. Rather, they seem to be policy based.
Which policies? The worst would be: WTO/GATT/Free Trade, FSA and financial deregulation.
Looking back in history, we have adopted the trade policies of the Confederacy. It’s designed to devalue humanity.
Why talk about education when we don’t even employ all of our educated citizens? Ditch the Confederate economic and trde policies…. then we can talk about education.