Reading the Employment Numbers: The Reshaping of the US Labor Force

By Bill Barclay, Chicago Political Economy Group

OK, the April employment report continued the string of now 50 straight months of job growth in the private sector – almost unprecedented – and we’re roughly back to where we were in late 2007, just before the official beginning of the “Great Recession.”  The top-line number for the report on April job creation was 288,000 new jobs and a decline in the unemployment rate to 6.3%.  In many economic recoveries in the post-WWII years, this would be good news and worth celebrating.  But the Long Depression that began in 2007 is far from over, and I don’t mean just that the number of long-term unemployed remains higher than in any other post-recession period or that the labor force participation rate is lower than at any time since the early 1980s, both of which are true.  I mean the underlying problem, that the US economy is a failure in achieving the core goal of any modern economy: generating living wage jobs for all willing and able to work.

It is in comparison to this goal that an overview of the job creation occurring in the past 50 months is striking.   Although low-wage jobs – those paying less than $13.50/hr in 2013 dollars – represented only 22% of total jobs lost during the Great Recession, this sector has accounted for 44% (twice as much) of the new jobs created.  In contrast, while mid-wage jobs (paying $13.70-20/hr) were 37% of jobs lost, they are only 26% of new jobs created.  Meanwhile, the high-wage job sector has generated only 30% of new jobs although 41% of the jobs lost were in this category. 

What we are seeing is a reshaping of the US labor force into one in which the low wage sector is the engine of job growth.  And, this is a labor force that already had one of the largest low-wage sectors as a percent of total employment among wealthy countries.  Even before the 2008 financial panic, more than one of every six workers in the US made less than half of the median wage, compared to fewer than one of every 12 in most OECD countries and as low as only one of every 16 in Denmark. 

I think that the shift towards a low-wage economy is the underlying reason for the widespread feeling that the recession never actually ended.  It is certainly the driving force behind the failure of new high school and college graduates to find employment that can serve as the basis for a career, leaving the family nest, starting a family, etc. 

In the years since the housing bubble collapsed, the rate of what economists call “household  formation” has dropped dramatically.  In the 2001-2006 period, the number of new households averaged 1.35 million annually; in contrast, from 2007-2013, the number of households rose by an average of only 569,000 a year, less than half the earlier rate.  This shift is reflected in the slow 2%/year growth of the US economy during the latter period.

The social dynamics connecting low-wage jobs, low levels of household formation and slow economic growth are simple.  Let’s start with the low-wage jobs.  While the unemployment rate for new high school and college graduates has long been significantly above (often double) that of the economy as a whole, there has been a shift in the jobs that these new grads have been able to obtain.  Low-wage jobs are those most readily available in an economy that has more than three people unemployed for every job opening, and these are the ones that new entrants into the labor force usually get.  Today, almost 45% of college grads aged 21-27 are working in jobs that do not require the college degree they just finished spending time and money obtaining.  We have a large – and growing – number of baristas and cashiers, but stagnant or declining numbers of people employed in publishing, telecommunications or teaching.  The former average less than $12.50/hr, while the latter average over $20/hr.  And, construction, one of the long-time sources of high-wage jobs for those with less than a college degree, now employs only 75% of the number of workers employed in the years prior to the 2008 financial panic. 

So, who can afford to move out of their family’s home to create a new household?  Many fewer than in the past.  The proportion of 18-34 year olds living with their parents and not in school has increased by almost 15% compared to the years prior to the Great Recession.   And when the move does occur, it is more often into an apartment – probably with a roommate – rather than into a single-family house.  While this may be positive from an environmental perspective, multi-family building construction generates only half the number of new jobs as construction of single-family housing. 

The neoliberal economy that emerged in the 1970s was driven largely by asset-price bubbles, with the two largest ones being the dot.com and housing bubbles.  The failure of this economic paradigm is not only evident in the continuing high levels of un- and under-employment.  (A large part of the reason for the decline in the April unemployment numbers and rate was the loss of over 800,000 people from the labor force.)  It is also starkly etched in the failure of the “job creators” to actually create jobs that have a future. 

We have a choice.  On the one hand, there is the neoliberal path towards “global competitiveness” by paying people less than in other wealthy countries, that is, the continued expansion of a low-wage sector.  Alternatively, we can recognize that lack of aggregate demand in the economy can best be addressed by a real jobs program such as that proposed by Rep. John Conyers in HR 1000, the 21st Century Humphrey-Hawkins Full Employment and Training Act.  The Act has picked up some additional sponsors in recent months.  Check to see if your representative is a co-sponsor by going to thomas.gov, selecting "bill number" and entering HR 1000.  Depending on the result, thank your representative or arrange a meeting and insist that they sign on.

Bill_Barclay.jpgBill Barclay is a founding member of the Chicago Political Economy Group and co-chair of Chicago DSA.

 

 

 

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DSA Queer Socialists Conference Call

May 25, 2017
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Join DSA's Queer Socialists Working Group to discuss possible activities for the group and its proposed structure. 9 pm ET/8 pm CT/7 pm MT/6 pm PT.

 

What Is DSA? Training Call

May 30, 2017
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If you're a new DSAer, have been on a new member call, but still have questions about DSA's core values/strategy/core work and how to express these ideas in an accessible way to the media, as well as to friends, family and others who might be interested in joining DSA, this call is for you. 

We will talk through the basics of DSA's political orientation and strategy for moving toward democratic socialism, and also have call participants practice discussing these issues with each other. By the end of the call you should feel much more comfortable thinking about and expressing what DSA does and what makes our organization/strategy unique. 8 pm ET; 7 pm CT; 6 pm MT; 5 pm PT. 70 minutes.

Film Discussion: Rosa [Luxemburg]

May 31, 2017
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Join DSA member Jason Schulman to discuss the film Rosa, directed by feminist filmmaker Margarethe von Trotta. View it here at no cost before the discussion. Marxist theorist and economist Rosa Luxemburg (1871-1919) played a key role in German socialist politics. Jason edited Rosa Luxemburg: Her Life and Legacy and has a chapter in Rosa Remix. 9 ET/8 CT/7 MT/6 PT.

Film Discussion: The Free State of Jones

June 11, 2017
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Join Victoria Bynum, Distinguished Professor Emeritus of History, Texas State University, San Marcos, to discuss The Free State of Jones. STX Entertainment bought the film rights to Bynum's book of the same title. She also served as a consultant and appears in a cameo scene. What was the Free State of Jones? During the Civil War, an armed band of deserters led by Newt Knight, a non-slaveholding white farmer, took to the swamps of southeastern Mississippi and battled against the Confederacy in an uprising popularly known as “The Free State of Jones.” Joining Newt in this rebellion was Rachel, a slave. From their relationship, there developed a controversial mixed-race community that endured long after the Civil War had ended. View the film here for $6 before the discussion. 8 ET/7 CT/6 MT/5 PT.

Introduction to Democratic Socialism

June 13, 2017
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Join Bill Barclay, Chicago DSA co-chair, and Peg Strobel, National Political Committee and Feminist Working Group co-chair, on this webinar for an overview of what we in Democratic Socialists of America mean when we talk about "socialism," "capitalism" and the goals of the socialist movement. 9:30 PM ET; 8:30 PM CT; 7:30 PM MT; 6:30 PM PT.

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Film Discussion: Pride

September 10, 2017
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Join DSA members Eric Brasure and Brendan Hamill to discuss the British film Pride (2014). It’s 1984, British coal miners are on strike, and a group of gays and lesbians in London bring the queer community together to support the miners in their fight. Based on the true story of Lesbians and Gays Support the Miners. The film is available for rent on YouTube, Amazon, and iTunes. 8 ET/7 CT/6 MT/5 PT.

Film Discussion: Union Maids

September 24, 2017
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Join DSA member and labor historian Susan Hirsch in discussing Union Maids (1976). Nominated for an Academy Award, this documentary follows three Chicago labor organizers (Kate Hyndman, Stella Nowicki, and Sylvia Woods) active beginning in the 1930s. The filmmakers were members of the New American Movement (a precursor of DSA), and the late Vicki Starr (aka Stella Nowicki) was a longtime member of Chicago DSA and the Chicago Women's Liberation Union. It’s available free on YouTube, though sound quality is poor. 8ET/7CT/6MT/5PT.