The Frightening Rise In Low-Quality, Low-Paying Jobs: Is This Really A Strong Job Market?

November 25, 2019

Editor’s note: More tier one business press reporting on our Job Quality Index.

For over 100 consecutive months, the United States government has reported that the economy has produced 50-year highs in employment and record lows in unemployment. 

[Jack Kelly | November 25, 2019 | Forbes]

The data from the Department of Labor (DOL) suggests that we are in a Utopian period of economic prosperity due to the historic low rate of unemployment. By many metrics, the job market is doing well and, in some spots, it's blazing hot.   

There is a big disconnect. The reality for most people is inconsistent with the employment figures. Stories of job seekers spending an exceedingly long period of time searching for a suitable job, lackluster salary offers, relatively small wage increases for employees and the rapid growth of gig-economy jobs—such as Uber and Lyft drivers, Instacart shoppers and DoorDashers—repudiate the “best job market ever” narrative.

There have been some new reports that back up the claims of people who say that the job market is not as hot as advertised. A study by the Brookings Institute, a nonprofit public policy organization that conducts research to solve problems facing society, found that a large amount of the newly created positions are “low-wage” jobs. According to the report, low-wage workers make up a huge part of the workforce. A staggering amount of people—over 53 million; 44% of all workers ages 18 to 64 in the U.S.—earn low hourly wages.    

A new job-measuring metric, the U.S. Private Sector Job Quality Index (JQI), tracks the quality and pay of jobs is gaining attention. The researchers, which include Cornell University, plan to report their findings each month along with government’s DOL data. 

The JQI tracks the weekly income a job generates for an employee. Similar to the Brookings Institute study, it reflects sluggish hourly wage growth, flat or declining hours worked and low labor participation (the amount of people actively looking for work). Since 1990, the jobs available have significantly declined in quality, as measured by the income earned by workers. Less hours worked with less pay and little room for growth is becoming the norm. The increase in low quality jobs is a byproduct of the growth in the service sector, including healthcare, leisure, hospitality and restaurants, which pays lower wages. This trend coincides with the decreased needs in the once-flourishing manufacturing sector.

The low-quality jobs offer an average of 24.6 hours of work per week at $14.65 an hour, which is $360 per week. These roles are also the 13.5 million retail jobs offering 30.3 hours a week at $16.73 an hour, which is $506 in weekly pay. About 83% of all private sector jobs—105 million workers—are in nonsupervisory jobs. More than half of those positions—58 million—pay less than the average weekly U.S. wage of $793. A good deal of these jobs don’t afford proper  healthcare or benefits. Unfortunately, for many Americans, these are the best jobs they could get.

Bloomberg asserts, “If quality is more important than quantity, the U.S. labor market isn’t as good as the headline numbers indicate,” as it relates to the index. Daniel Alpert, an adjunct professor at Cornell Law School said, “This will be the grain of salt to take with the rest of the jobs data.” Alpert, who also works on Wall Street and is a managing partner of Westwood Capital added, “This is talking about the erosion of the middle class: the more people you have in low-wage, low-hour jobs, the worst inequality is.”

While this is happening, certain sectors, such as technology, can’t find sufficient enough people to staff their open headcounts. It looks like a bifurcated job market. On one end of the spectrum, there is a strong demand for certain skilled professionals that offers high salaries, advancement, solid benefits and equity in the company. The other side of the employment spectrum consists of workers just getting by with low-wage, no-growth jobs. 

As long as the government only reports the quantity of jobs (as opposed to the quality), it sends a false picture to the public about the real state of the overall job market.  

Read the original article here. 

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  • Bruce Bishop
    Retail and Service jobs typically pay about one-third to one-half of what manufacturing jobs pay. The key to prosperity is manufacturing — adding value to raw materials to create durable wealth. Manufacturing pays better because it creates wealth and because the jobs are relatively undesirable. Like mining and construction, factory jobs tend to be hot/cold, dirty, noisy, repetitive, and sometimes dangerous. Factories have to pay a premium in wages and benefits to attract enough workers. However, having spent years in manufacturing, service, and retail, I can say that manufacturing workers are just as happy as those in the other fields, and they are much better able to provide for their families.

    For those factory workers with talent and ambition, the paths to higher pay are almost unlimited. Overtime was almost always available to those willing to work extra hours, not to mention a steady demand for supervisors, managers, mechanics, electricians, millwrights, machinists, tool-makers, programmers, quality control technicians, and time-study technicians. Of course manufacturing also had high-paying opportunities for college graduates, including engineers, accountants, finance, marketing, and MBAs.

    During my twenty years in manufacturing, i was frequently getting calls from professional recruiters and former colleagues with offers of better opportunities. During that time, I actually worked for six separate Fortune 500 companies and a handful of smaller firms. Unfortunately when the factories started closing and moving to China in the 1990s, those opportunities dried up. My 20 years of hard-earned experience, as well as my degrees were virtually useless in service and retail. There were tens of thousands of people, just like me, who had to start over in mid-life.

    Our greedy incompetent government “free traded” our economy right out from under us, encouraged by “journalists,” academics, economists, and globalists of every stripe. They generally looked down their noses at those of us in manufacturing, and were envious of the entrepreneurs who became millionaires building widgets, or providing key services to manufacturers.

    Trumps tariffs will help a little, but China will simply absorb those tariffs, and wait for Trump to leave office — then it will be back to “Death by China.” China has a 25 year plan to dominate us both economically and militarily. Our planning horizon goes only as far as the next election. Tell me I’m wrong. You can email me at bbishop725@aol.com