Where have all the good jobs (i.e. good salaries) gone?
Well, increasingly, they don’t exist.
A recent NPR story titled “How America’s Losing the War on Poverty” gives us some insight:
In 1988, President Ronald Reagan delivered a State of the Union address in which he declared that the war on poverty had failed. Now, with the poverty rate in America expected to reach its highest rate since 1965, it looks like Reagan may have been right.
Not so, says Peter Edelman, a professor at Georgetown University and an expert on poverty, but, he tells Raz, there is a lot to worry about.
“One reason is we’re still in a recession,” Edelman says. “We’ve had a change in our economy over the last 40 years that has produced a flood of low-wage jobs.”
One half of all jobs in the U.S. today now pay less than $35,000 a year. Adjusted for inflation, that’s one of the lowest rates for American workers in five decades.
There’s a common perception that somebody who’s poor or living below the poverty level is lazy or simply living off government handouts. Edelman says the actual average poor person is working.
“And working as hard as she or he possibly can,” he says. “And particularly in the recession, not able to get work or steady work. There are certainly people who make bad choices, but the fundamental question in our economy is the number of people who are doing absolutely everything they can to support their families — and they just can’t make it.”
You read that right: One half of jobs in America now pay less than $35,000 annually.
And just because you have an education beyond high school doesn’t mean you aren’t going to end up with one of those jobs that pay less than $35,000. (Full disclosure: I’m a case in point.)
I recently wrote a story about education levels in Yankton County which showed:
In Yankton County, for example, the number of people above the age of 25 with college degrees rose from 10.3 percent in 1970 to 26.8 percent in 2010, according to Census data.
That was slightly below the 2010 national average of 27.9 percent, but higher than the South Dakota average of 25.3 percent.
Yankton County had 10,273 adults over 25 years of age in 1970 and 15,390 such adults in 2010.
A study by the Center for Economic Policy and Research, “Where Have All The Good Jobs Gone?,” finds that the nation, in general, has increased its education levels, but that has not led to better jobs.
The U.S. workforce is substantially older and better educated than it was at the end of the 1970s.
The typical worker in 2010 was seven years older than in 1979. In 2010, over one-third of US
workers had a four-year college degree or more, up from just one-fifth in 1979.
Given that older and better educated workers generally receive higher pay and better benefits, we
would have expected the share of “good jobs” in the economy to have increased in line with
improvements in the quality of workforce. Instead, the share of “good jobs” in the U.S. economy
has actually fallen.
By our definition of a good job – one that pays at least $37,000 per year, has employer-provided
health insurance, and an employer-sponsored retirement plan – the share of workers with a “good
job” fell from 27.4 percent in 1979 to 24.6 percent in 2010. The total share of good jobs had
declined even before the Great Recession; in 2007, for example, only 25.0 percent of workers had a
good job by our definition.
Our estimates, which control for increases in age and education of the population, suggest that
relative to 1979 the economy has lost about one-third (28 to 38 percent) of its capacity to generate
Let’s look at some of the jobs in Yankton County and see how we stack up.
A recent flier from Yankton Area Progressive Growth showed that the average annual wage for a Yankton County manufacturing worker was $37,124 — just barely fitting into CEPR’s “good job” category by that measure. For someone in professional services, the average wage is $29,296. If you are in business support services, it’s $27,768.
Unknown is how many of those jobs have health care and a retirement plan.
According to the Bureau of Labor Statistics, Yankton County workers had an average weekly wage of $641 in the second quarter of 2011 (the most recent I could find). That’s $33,332 per year.
When all 66 counties in South Dakota were considered, none had wages above the national average of $891. Ten reported average weekly wages under $500, 23 had wages from $500 to $549, 12 reported wages from $550 to $599, 11 had wages from $600 to $649, and 10 had wages of $650 or more.
So what does CEPR think is happening with the economy?
The standard explanation for the deterioration in the economy’s ability to create good jobs is that
most workers’ skills have not kept up with the rapid pace of technological change. But, if
technological change were behind the decline in good jobs, then we would expect that a higher –
probably substantially higher – share of workers with a four-year college degree or more would have
good jobs today. Instead, at every age level, workers with four years or more of college are actually
less likely to have a good job now than three decades ago. This development is even more surprising
because the economy also has almost twice as many workers with advanced degrees today as it did in
We believe, instead, that the decline in the economy’s ability to create good jobs is related to a
deterioration in the bargaining power of workers, especially those at the middle and the bottom of
the income scale. The main cause of the loss of bargaining power is the large-scale restructuring of
the labor market that began at the end of the 1970s and continues to the present. The share of
private-sector workers who are unionized has fallen from 23 percent in 1979 to less than 8 percent
today. The inflation-adjusted value of the minimum wage today is 15 percent below what it was in
1979. Several large industries, including trucking, airlines, telecommunications, and others, have been
deregulated, often at a substantial cost to their workers. Many jobs in state and local government
have been privatized and outsourced. Trade policy has put low- and middle-wage workers in the
United States in direct competition with typically much lower-wage workers in the rest of the world.
A dysfunctional immigration system has left a growing share of our immigrant population at the
mercy of their employers, while increasing competitive pressures on low-wage workers born in the
United States. And all of these changes have played out in a macroeconomic context that has – with
the exception of the last half of the 1990s – placed a much greater emphasis on controlling inflation
than achieving full employment. In our view, these policy decisions, rooted in politics, are the main
explanations for the decline in the economy’s ability to generate good jobs.
Ultimately, these are some sad facts to chew on, I think most anybody would agree. But those are the facts.
The question is, what do we do about them?