OPINION
Updated November 5, 2012, 7:26 p.m. ET
A Part-Time, Low-Wage Epidemic
The jobs gained recently by the U.S. economy are disproportionately low-paying, insecure ones.
By MORTIMER ZUCKERMAN
As Americans head to the polls, they face a disastrous new normal: For the first time, the U.S. economy has shifted in the direction of a part-time, low-wage workforce.
The number of Americans now working part time has soared to 8.3 million—up 313,000 in the past two months alone. With economic growth declining or stagnant for quarter after quarter, many companies feel it is too risky to take on people full time.
This has created an army of "underutilized labor." America's narrow unemployment rate is 7.9%, but it is 14.6% when accounting for involuntary part-time workers. The number of Americans working full time has declined by 5.9 million since September 2007, while the number working part time has jumped by 2.6 million.
Over the same period, according to the National Employment Law Project, low-wage occupations have grown nearly three times as fast as mid-wage and higher-wage ones. Whereas lower-wage jobs were 21% of losses during the recession, they have accounted for 58% of new jobs since—and these have the highest proportion of part-time jobs. By contrast, mid-wage occupations were 60% of recession losses but have been only 22% of recovery growth. Higher-wage occupations were 19% of jobs lost and have been 20% of jobs recovered.
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Getty Images
The lower-wage occupations that have seen the most growth include retail salespersons, food-preparation workers, laborers and freight workers, waiters and waitresses, personal- and home-care aides, office clerks and customer representatives. Over the past two years, the food service, retail and employment-services industries have added a total of 1.7 million low-wage jobs, fully 43% of America's net employment growth.
Meanwhile, the better-paying manufacturing, finance, insurance and real-estate industries have seen no growth or not enough to make up for recession losses. And steep cuts in state and local government jobs have hit mid-wage and high-wage employees hardest.
Then there is the matter of wage growth and decline. For those in lower-wage and mid-wage jobs, pay has declined over the past year by 2.1% and 2%, respectively. In higher-wage occupations, pay has increased 4.1%.
This underscores the difference between job quantity and job quality. When low-wage jobs are growing in number, mid-wage jobs are disappearing and higher-wage jobs are paying more, the result is a hollowed-out middle class.
Looking ahead, the industries expected by the Bureau of Labor Statistics to add the most jobs by 2020—health care, social assistance and retail—are notorious for low-wage and insecure work. Many don't offer even minimum wage or overtime protection.
Today's part-time workers will have it particularly rough in the future if they don't receive training to boost their skills. America will need to create 1.8 million to three million new jobs every year just to absorb the labor force's new entrants. So competition for scarce jobs will be tough, especially when technology and globalization are wiping out many middle-class jobs in manufacturing and transportation, for example.
Won't the disequilibrium be corrected when the economy gets out of its rut? Alas, the long-term nature of these trends suggests they are more structural than cyclical. From academia to retail, government to warehouse work, employers are increasingly offering part-time work or nominally full-time jobs with lower wages and fewer benefits. ObamaCare will accelerate this trend starting in 2014, as the costs of insuring full-time workers will get so high that firms will have incentives to limit their weeks to 29 hours or fewer.
America's challenge is to avoid descending totally into a low-wage, part-time economy with stagnant growth and employers pressed to shorten workers' hours or ask them to take unpaid leave. If not—and if millions of workers feel that they are falling further and further behind—the result will be a stratified society.
Social mobility in America is already much less than we have long liked to believe. And disparities in income, education and social behavior are reinforcing themselves all the more, so future mobility might be lower still. Thus many Americans' gut feeling that the American dream is fading.
According to the Pew Research Center, one-third of Americans now identify themselves as lower class or lower middle class, up from one-quarter in 2008. This isn't surprising when 23 million Americans are unemployed or underemployed. They, and everyone else in the economy, want to know: When will America once again be the land of opportunity?
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Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report.
The number of Americans now working part time has soared to 8.3 million—up 313,000 in the past two months alone. With economic growth declining or stagnant for quarter after quarter, many companies feel it is too risky to take on people full time.
This has created an army of "underutilized labor." America's narrow unemployment rate is 7.9%, but it is 14.6% when accounting for involuntary part-time workers. The number of Americans working full time has declined by 5.9 million since September 2007, while the number working part time has jumped by 2.6 million.
Over the same period, according to the National Employment Law Project, low-wage occupations have grown nearly three times as fast as mid-wage and higher-wage ones. Whereas lower-wage jobs were 21% of losses during the recession, they have accounted for 58% of new jobs since—and these have the highest proportion of part-time jobs. By contrast, mid-wage occupations were 60% of recession losses but have been only 22% of recovery growth. Higher-wage occupations were 19% of jobs lost and have been 20% of jobs recovered.
.
A San Francisco, Calif., restaurant
The lower-wage occupations that have seen the most growth include retail salespersons, food-preparation workers, laborers and freight workers, waiters and waitresses, personal- and home-care aides, office clerks and customer representatives. Over the past two years, the food service, retail and employment-services industries have added a total of 1.7 million low-wage jobs, fully 43% of America's net employment growth.
Meanwhile, the better-paying manufacturing, finance, insurance and real-estate industries have seen no growth or not enough to make up for recession losses. And steep cuts in state and local government jobs have hit mid-wage and high-wage employees hardest.
Then there is the matter of wage growth and decline. For those in lower-wage and mid-wage jobs, pay has declined over the past year by 2.1% and 2%, respectively. In higher-wage occupations, pay has increased 4.1%.
This underscores the difference between job quantity and job quality. When low-wage jobs are growing in number, mid-wage jobs are disappearing and higher-wage jobs are paying more, the result is a hollowed-out middle class.
Looking ahead, the industries expected by the Bureau of Labor Statistics to add the most jobs by 2020—health care, social assistance and retail—are notorious for low-wage and insecure work. Many don't offer even minimum wage or overtime protection.
Today's part-time workers will have it particularly rough in the future if they don't receive training to boost their skills. America will need to create 1.8 million to three million new jobs every year just to absorb the labor force's new entrants. So competition for scarce jobs will be tough, especially when technology and globalization are wiping out many middle-class jobs in manufacturing and transportation, for example.
Won't the disequilibrium be corrected when the economy gets out of its rut? Alas, the long-term nature of these trends suggests they are more structural than cyclical. From academia to retail, government to warehouse work, employers are increasingly offering part-time work or nominally full-time jobs with lower wages and fewer benefits. ObamaCare will accelerate this trend starting in 2014, as the costs of insuring full-time workers will get so high that firms will have incentives to limit their weeks to 29 hours or fewer.
America's challenge is to avoid descending totally into a low-wage, part-time economy with stagnant growth and employers pressed to shorten workers' hours or ask them to take unpaid leave. If not—and if millions of workers feel that they are falling further and further behind—the result will be a stratified society.
Social mobility in America is already much less than we have long liked to believe. And disparities in income, education and social behavior are reinforcing themselves all the more, so future mobility might be lower still. Thus many Americans' gut feeling that the American dream is fading.
According to the Pew Research Center, one-third of Americans now identify themselves as lower class or lower middle class, up from one-quarter in 2008. This isn't surprising when 23 million Americans are unemployed or underemployed. They, and everyone else in the economy, want to know: When will America once again be the land of opportunity?
.
Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report.
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