The Wall Street Journal. June 10, 2014.
The U.S. may have regained all the jobs destroyed by the Great Recession, but the new jobs that replaced the old ones aren’t any better — and that helps explain why the five-year recovery has seemed so anemic thus far.
The economy employed 138.46 million Americans in May, according to the Labor Department’s so-called establishment survey issued on Friday (Another government survey says we are not quite there yet).
The prior peak was 138.37 million, set in January 2008, just as the 2007-2009 recession was getting underway.
A close look at the employment numbers, however, shows the composition of the labor market is markedly different compared to early 2008. And it appears the economy has replaced a sizable number of good-paying jobs with ones that offer less than the average wage, now $24.38 an hour.
Take manufacturing and construction, both of which pay more than the average hourly wage. These industries represent 13% of all U.S. jobs, down from 15.3% in early 2008. The economy has 1.63 million fewer manufacturing jobs and 1.47 million fewer construction jobs.
Other high-wage industries that still have not recouped all the jobs that existed in early 2008 include the financial sector (-358,000), wholesale trade (-172,000), government (-519,000) and information services such as media and publishing (-371,000).
Altogether, the U.S. has 4 million fewer jobs in these well-paid sectors vs. January 2008.
The upturn in hiring over the past few years, meanwhile, has been concentrated in areas such as health care (1.56 million), food preparation (959,000), white-collar professional and business services (794,000) and education (414,000).
Some of these occupations such as business services pay quite well. Yet the economy has added perhaps no more than 3 million jobs since 2010 that pay above the average hourly wage, a review of Labor Department statistics show. (A more precise breakdown is difficult because some broad employment categories such as health care and business services include both high-paying and low-paying work.)
The mixed quality of jobs being created is partly reflected by the slow growth in hourly wages for production and nonsupervisory workers — just a cumulative 10.6% in the 59 months since the recession ended. By contrast wages rose 15.1% in the 59-month period following the end of the 2000-2001 downturn.
Slow wage growth is a big reason why the economy has been expanding at only two-thirds of its normal speed since the recession ended. While bosses might be getting paid more, line workers are seeing much in the way of wage growth.
Whether the U.S. economy shifts into a faster growth gear depends heavily on the direction of wages. Some economists predict wages will rise sharply in the next year as the labor market tightens. Others disagree and see the same slow pace of wage growth continuing.
A new survey by the National Federation of Independent Business points to higher wages. The trade group’s small-business optimism index rose in May to its highest level since September 2007, shortly before the last recession began. Small-business owners said it’s more difficult to find qualified workers and they indicated they expect to pay higher compensation to attract talent.
Also on Tuesday, the Bureau of Labor Statistics said job openings in the U.S. in April jumped to the highest level since September 2007, another sign that the labor market is tightening.