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.