Wednesday, November 20, 2019
Low Unemployment and Those Who Lose
Statistics without analysis and
understanding can push people to draw unwarranted conclusions. Particularly
when the numbers are based on averages, where a few very high numbers at
the top create higher averages but do very little to reflect the big picture
lower down the calculation.
“Unemployment is hovering near a
five-decade low, workforce participation is at the highest level in six years
and Federal Reserve Chairman Jerome H. Powell recently called the labor market ‘strong.’
“Yet, 44% of Americans ages 18 to 64
are low-wage workers with few prospects for improving their lot, according to a
Brookings Institution report.
“An estimated 53 million Americans
are earning low wages, according to the study. That number is more than twice
the number of people in the 10 most populous U.S. cities combined, the report
notes.
“The median wage for those workers is
$10.22 an hour and their annual pay is $17,950.
“Although many are benefiting from
high demand for labor, the data indicated that not all new jobs are good,
high-paying positions.
“The definition of ‘low-wage’ differs
from place to place. The authors define low-wage workers as those who earn less
than two-thirds of the median wage for full-time workers, adjusted for the
regional cost of living.” Bloomberg, November 10th.
In short you don’t have to make much
money to be deemed employed, and if you have totally given up on the job
market, you are not even counted. Oddly, a very powerful constituency in Donald
Trump’s base are in that low wage arena. Making America Great Again means that
they expect to get back the wage rates such workers used to earn. With union
membership slipping away, many people are making a whole lot less in
inflation-corrected earning power than was paid at the peak of the earnings
market. Not so at the top of the job market.
As major corporate CEOs have ramped
up to earn hundreds of times what their average employee makes, de-unionization,
globalization and increasingly automation have eroded buying power for those at
the bottom. Where once the mighty Teamsters ruled the road, today “independent
drivers” often have to work 50% more to make 50% less. Many in the low wage
bracket may lack skills that are in demand or live in pockets of lower
employment of generally lower wages. Moving to better job markets is both
expensive and disruptive; many just cannot afford to try.
“‘We have the largest and longest
expansion and job growth in modern history,’ Marcela Escobari, coauthor of the
report, said in a phone interview… That expansion ‘is showing up in very
different ways to half of the worker population that finds itself unable to
move,’ she said.
“The millions of Americans in
low-wage jobs are likely to stay there. Workers who make $10 to $15 an hour
have a 52% chance of remaining in that wage bracket when they switch jobs… For
middle-wage workers, or those earning $19 to $24 an hour, there’s a 46% chance
that a job transition would result in lower pay. That’s bad news for the nearly
3.5 million workers who quit their jobs in September alone.
“The demographics of low-wage workers
span race, gender and geography, but women and minority groups are more likely
to earn low wages… Black workers are 32% more likely to earn low wages than
whites, and Latinos are 41% more likely.
“Nearly half of low-wage workers are
concentrated in just 10 occupations, according to the report… The largest group
is retail salespeople (4.5 million), followed by information and records clerks
(2.9 million), cooks and food preparation workers (2.6 million), building
cleaners and janitors (2.5 million), material movers (2.5 million) and food and
beverage servers (2.4 million).
“Rounding out the top-10 list are
construction trade workers (2.3 million), material dispatchers and distributors
(1.9 million), motor vehicle operators (1.8 million) and personal care and
service providers (1.8 million).
“As for the future, the main concern
is displacement, Escobari said… ‘Both the industries that are growing and the
industries that are shrinking are low wage,” and available work “is going to be
more low-wage work,’ she said.” Bloomberg.
Democrats, increasingly viewed as a
“liberal elite,” seem to have long-since lost their focus in support of these
workers. Trump’s GOP populism has made replacement promises that cannot be
delivered… but at least provide hope. But this is a deep and chronic
problem that only gets worse as our government cuts taxes for the rich and
eliminated programs to help the rest. Are these Americans simply a total
write-off? Really?
I’m
Peter Dekom, and systemic under-employment just might be the elephant in the
room.
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