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

April 24, 2017
· 36 rsvps

DSA is in the process of forming a Queer Socialists Working Group. This call will cover a discussion of possible activities for the group, its proposed structure, assigning tasks, and reports on the revision of DSA's LGBT statement and on possible political education activities. 9 pm ET/8 pm CT/7 pm MT/6 pm PT.

 

Introduction to Socialist Feminism Call

April 30, 2017
· 51 rsvps

Join Philadelphia DSA veteran activist Michele Rossi to explore “socialist feminism.” How does it differ from other forms of feminism? How and when did it develop? What does it mean for our activism? 4-5:30pm ET, 3-4:30pm CT, 2-3:30pm MT, 1-2:30pm PT.

DSA Webinar: Talking About Socialism

May 02, 2017
· 6 rsvps

Practice talking about socialism in plain language. Create your own short rap. Prepare for those conversations about socialism that happen when you table in public.

Join us for our latest organizing training for democratic socialist activists: DSA’s (Virtual) Little Red Schoolhouse.

This training is at 9:00pm Eastern, 8:00pm Central, 7:00pm Mountain, 6:00pm Pacific, 5:00pm Alaska, and 3:00pm Hawaii Time. Please RSVP.

Instructor:

Steve Max, DSA Vice Chair and one of the founders of the legendary community organizing school, The Midwest Academy

In Talking About Socialism you will learn to:

  • Have a quick response ready to go next time someone asks you about democratic socialism.
  • Create your own elevator pitch about democratic socialism and DSA.
  • Use your personal experience and story to explain democratic socialism.
  • Think through the most important ideas you want to convey about democratic socialism.
  • Have a concise explanation of what DSA does, for your next DSA table, event or coalition meeting.

Training Details

  • This workshop is for those who have already had an introduction to democratic socialism, whether from DSA's webinar or from other sources.
  • If you have a computer with microphone, speakers and good internet access, you can join via internet for free.
  • If you have questions, contact Theresa Alt <talt@igc.org> 607-280-7649.
  • If you have very technical questions, contact Tony Schmitt <schmittaj@gmail.com> 608-335-6568.
  • Participation requires that you register at least 45 hours in advance, by midnight Sunday.

 

DSA New Member Orientation Call

May 06, 2017
· 44 rsvps

You've joined DSA - Great. Now register for this New Member Orientation call and find out more about our politics and our vision.  And, most importantly, how you can become involved.  2 pm ET; 1 pm CT; 12 pm MT; 11 am PT.  

Film Discussion: Rosa [Luxemburg]

May 31, 2017
· 69 rsvps

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
· 18 rsvps

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.