Bad Jobs And Worse Commentary
In an April 27, 2014 article entitled Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones by Annie Lowrey, the New York Times finally got around to acknowledging what many of us have been chronicling for sometime, the poor quality of jobs created since the end of the recession. Lowrey was writing on a report issued by the National Employment Law Project. This report noted that in the last recession the economy lost more high wage jobs than it has since gained and it has created more low wage jobs than it had previously lost. It came to this conclusion by looking by industry at wage rates and job gains/losses. The breakdown was as follows:
HIGHER WAGE INDUSTRIES (median wage $20.03-$32.62)
Jobs lost January 2008 to February 2010: 3.579 million
Jobs gained February 2010 to February 2014: 2.603 million
MID-WAGE INDUSTRIES (median wage $13.73-$20.00)
Jobs lost January 2008 to February 2010: 3.240 million
Jobs gained February 2010 to February 2014: 2.282 million
LOWER-WAGE INDUSTRIES (median wage $9.48-$13.33)
Jobs lost January 2008 to February 2010: 1.973 million
Jobs gained February 2010 to February 2014: 3.284 million
Difference: +1.851 million
Looking at these numbers, there is a fair amount of wage compression in the groups. If we take a 34.4 hour work week and a 50 week work year, the highest median income of lower paid workers is around $24,000, while the lowest median income of the higher paid workers is something over $34,000. Most of us would not consider a $34,000 income, even a median one, to be high wage. So while the report shows evidence of what I call the crapification of the American workplace, it likely greatly understates its degree from the 2010 trough.
Nevertheless, the pushback was quick. The next day on April 28, 2014, Justin Wolfers, also at the Times, published a rebuttal.
“Although I’m sympathetic to the idea of tracking whether the recovery is generating high- or low-paid jobs, data on employment growth by industry provide a poor proxy. There are many highly paid managers working in the low-paid retail trade sector, just as there are many low-paid janitors working in the high-paid professional services sector.”
One should always be suspicious of any expression of sympathy followed by the dismissal of the point raised. Let me begin by saying that looking by industry for good and bad job growth is an imperfect proxy. But we need to understand that the Census and Bureau of Labor Statistics have never tracked job quality. As a result, proxies are imperative. And the one developped by the NELP is not bad for a first approximation.
Wolfers’ second point that there are many high paying jobs in a low paying sector like retail is just idiocy. Retail employed 15.26 million people seasonally adjusted last month. 13.049 million were non-management (production and nonsupervisory). That is 85.5% of them. They averaged 29.9 hours/week, down half and hour from a year ago and $14.26/hour. That’s a yearly income of between $21,000 and $22,000. Most jobs in retail are not going to be management and they are going to be poor paying, period.
Wolfers raises what he first refers to as a simple calculation and then “technical mumbo jumbo”. Basically, he is looking at the median change in wages resulting from the changing composition of jobs across industries. He comes up with a loss of some five cents across the board. This reminds me of the old saying, that are lies, damn lies, and statistics.
In February 2014, there were 115.895 million nonfarm private sector jobs, an increase of 8.708 million from the February 2010 trough, or 7.5% of the current sector. The NELP study addressed itself to subsets of this: 1.934 million (the number of mid- and higher wage jobs lost and 1.851 million (the number of net lower wage jobs gained). That is 1.7% to 1.6% of nonfarm private sector jobs. Remember that the NELP study was using a compressed range of median wages. Is it any wonder that wage changes in a compressed series covering less than 2% of workers will have only a minimal effect on the total? It is a wrongheaded manipulation of data akin to saying the Great Depression really wasn’t so bad because 75% of workers had jobs during it. The point is that, even under the NELP’s flawed methodology, 22.4% of the jobs lost in the 2007 recession were in its lower-wage category, but 43.9% of those created since are contained in it. This is an ongoing trend not a finished result and needs to be seen not just against the backdrop of the deteriorating quality of American jobs but the country’s growing inequality of wealth.