Barbara Gertz, 47, works the late-night shift at the Walmart in Aurora, Colorado. She works about 40 hours a week, from 10 p.m. to 7 a.m., stacking shelves with products fresh off the truck. She earns $12.80 an hour, $2 more than the base pay she used to make during regular business hours.
“I’m one of the lucky ones,” she says. “As much as I’d like to go back to the day shifts, I can’t afford to dock my pay.”
It’s a common plight for workers in post-recession America. Gertz started working for Walmart in January 2009, at the peak of the Great Recession. Six years later, she doesn’t love it but sees little chance of finding employment elsewhere.
Mind The Wage Gap
Jobs are on the rise. U.S. employers added a healthy 295,000 jobs in February, nudging the unemployment rate to 5.5%. Most states have already recovered the number of jobs they lost several years ago. Business leaders and politicians alike are increasingly upbeat about growth. And yet, the labor market retains an unsightly wound. Millions of low-wage jobs, mostly concentrated in the retail and service sectors, have taken the place of a lot of the better-paying jobs that hemorrhaged as a result of the crisis.
“There’s this imbalance between the industries where the recession’s job losses occurred and the industries that have experienced the greatest growth,” says Claire McKenna, policy analyst at the National Employment Law Project (NELP), which has studied the subject over the past few years.
By NELP’s count, middle- to high-wage sectors such as manufacturing, construction and finance accounted for 78 percent of the jobs lost during the recession. But from February 2010 to July 2014, they accounted for only 57 percent of employment growth. By contrast, low-wage industries such as retail shops and fast-food restaurants accounted for the other 43 percent.
A surge in low-paying jobs (from cashiers and clerks to waiters and warehouse workers) is typical in the early stages of economic recovery. But more than six years later, the trend continues mostly unabated. It’s especially noticeable in places like New York City, which lost a major chunk of lucrative finance-related jobs in the crisis.
Is The Change Permanent?
Some of the old manufacturing jobs, already under persistent threat from mounting global competition, are probably gone for at least the near future, Rick McGahey, an economics professor at The New School, says.
It’s probably not a safe bet, for instance, that General Motors will resume full production at its Janesville, Wisconsin, plant, officially on “standby” since 2009. Or that U.S. Steel, which just announced plans to lay off more than 1,000 workers at four plants, will hire a new batch of steelworkers anytime soon.
On the other hand, structural obstacles aren’t as prominent in construction, another sector that has struggled to return to its pre-recession employment levels. By the end of 2007, about 7.5 million worked in construction. Today, only 6.3 million do.
“Construction relies a lot on the housing sector,” McGahey says, “but if we made more infrastructure investments, you’d see more job growth.... It’s crazy for us not to be doing that.”
Jobs in the public sector, slammed by austerity measures from the federal to state levels, haven’t returned to pre-recession levels either.
That bright spot has fueled talk, in some circles, of a “skills gap”: the idea that millions of potential jobs in high-tech and IT await those Americans who are well-educated enough to come and grab them.
“This is a tremendous time to go to work if you’ve got the skills,” John Engler, the president of Business Roundtable, a prominent corporate lobbying group, said on a press call earlier this week.
Evidence for that theory remains scant, though: Save for those with a lot of formal education, unemployment levels are comparable across the labor force.
Elise Gould, senior economist at the Economic Policy Institute, rejects the idea that the United States is in permanent transition to a low-wage service economy -- that Taco Bell and T.J. Maxx are the Ford and Firestone of yesteryear. She says the problem today is more cyclical than structural.
“I think it’ll happen, it just needs some time,” Gould says, when asked about the hypothetical and long-awaited arrival of more remunerative professions. “We still have a demand shortage.”
Even if there are some big structural changes, McGahey says, that doesn’t mean all the new service sector jobs have to offer low pay. One of the fastest-growing industries, even before the recession hit, is health care. More than anything else, political factors shape the low wages earned by home care workers: Most aren’t entitled to basic overtime and minimum wage protections and many lack union representation.
“There’s no reason why other jobs can’t pay better,” McGahey says. “I think it’s about the institutional arrangements of how much we decide to pay for that work rather than anything inherent about the job itself.”