America's workers continue to struggle despite 'strong' jobs reports

For years, pundits and policymakers have claimed that America’s workers are doing better than ever. They point to low consumer prices, low unemployment, the availability of cheap credit and even a booming stock market. And they dismiss concerns about wage stagnation — since Americans are buying more flat-screen TVs and cellphones than ever. 

But that doesn’t account for what’s happening in many cities and towns throughout the nation. Millions of Americans are subsisting on retail work in strip malls and shopping centers. They’re earning hourly wages, and they can’t make ends meet, much less obtain financial security or robust health care.

There’s plenty of anecdotal evidence that America’s workers are being left behind. But now a group of researchers and economists have identified a key part of the problem — the kinds of jobs increasingly available to America’s workforce. And what they’ve found, as illustrated in a new U.S. Private Sector Job Quality Index (JQI), is troubling.

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Since 1990, the United States has been creating an overabundance of low-quality service jobs. In fact, 63 percent of the production and nonsupervisory jobs created over the past 30 years have been in low-wage and low-hour positions. That’s a marked contrast from the start of the 1990s, when almost half of these jobs (47 percent) were high-wage.

For more than a year, economists from Cornell University, the Coalition for a Prosperous America, the University of Missouri, Kansas City and the Global Institute for Sustainable Prosperity have been sifting through private sector jobs data to develop the JQI. And they’ve found that, in the past three decades, the U.S. economy has become increasingly dependent on jobs that offer fewer hours of work and at lower relative wages.

What exactly do these low-hour, low-wage positions look like? They could be one of the almost 15 million nonmanagement jobs in leisure and hospitality. These offer an average of 24.6 hours of work per week at $14.65 an hour. That’s $360 a week.  

Or they could be one of 13.5 million retail jobs offering 30.3 hours a week at $16.73 an hour. That’s $506 weekly.  

There are now roughly 105 million production and nonsupervisory jobs in the U.S. That’s 83 percent of all private sector jobs. And more than half of them — 58 million — pay less than the average weekly U.S. wage of $793. Many of these jobs don’t offer health care or other benefits. 

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These are the best jobs that many Americans can find and the most hours they can get. 

Ironically, all of this low-wage work is yielding one supposed “benefit” — stagnant price inflation. Consumer prices remain flat, in part because household earnings have flatlined. With more Americans earning low wages while working less than 30 hours per week, income levels have fallen. That has reduced overall purchasing power. And the situation is growing worse. Since 1999, low-wage employment has actually shrunk by an average of one hour per week.

All of this contrasts markedly with the widening gap for executive-level pay. Since the Great Recession, inflation-adjusted income growth for higher-tier jobs has climbed away from the average worker’s earnings. And that has driven a misleading impression of the overall job market.  

So what’s driving the wider trend?

From 2000 to 2010, the United States lost more than 5 million manufacturing jobs. That was a significant chunk of the nation’s middle-class workforce, and it meant millions of Americans tumbling down the wage scale — even as the total U.S. workforce kept expanding. Simply put, high-paying manufacturing jobs were replaced with lower-wage work and at reduced weekly hours. 

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What’s noteworthy is that “technological change” isn’t the dominant factor in such job loss. Otherwise, Americans would see similar declines in transportation and warehouse work. But Amazon — with its highly automated warehouses — has expanded employment. And other service sectors are seeing similar job growth. 

What really hurt America’s workforce was a poorly conceived trade policy that allowed subsidized imports to displace vital industries. And a failure to maintain domestic infrastructure deprived the economy of other manufacturing and construction opportunities. 

Where manufacturing once provided skilled, good-paying work — including benefits and health care — Americans lacking a college degree now find themselves becoming progressively more underemployed. Almost two-thirds of America’s workforce (65.1 percent) does not have a college degree. And so, 100 million Americans are watching their employment prospects gradually deteriorate.

There’s no easy fix for this. But the priority should be to restore wealth-generating industries, including manufacturing, that can spur middle-class job growth.

Any effort to revitalize manufacturing will need to tackle predatory trade with China as well as an overvalued U.S. dollar that artificially inflates export costs. These are important steps and necessary to halt a greater hemorrhaging of middle-class jobs. Anything less will mean an ongoing decline for America’s workers — and a continuing decline in job quality.

Daniel Alpert is a senior fellow and adjunct professor at Cornell Law School and founding managing partner of Westwood Capital, LLC. Michael Stumo is CEO of the Coalition for a Prosperous America.