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Unemployment is falling, but the fastest growing job markets offer low pay

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JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network, and welcome to the latest edition edition of The PERI Report.

Now joining us is Jeanette Wicks-Lim. She’s an assistant research professor at the PERI institute at the University of Massachusetts Amherst. She also writes for The New Labor Forum.

Thank you for joining us.


NOOR: So what do you have for us this week?

WICKS-LIM: Well, the things that I wanted to talk about today is just something that seemed to be missing from the general conversation about the U.S. economy. You know, lately the numbers for the jobs market, that is, unemployment rate, has been ticking down slightly over time. And it seems that as that’s been happening, the overall jobs picture, the fact that it’s still quite difficult for workers today, has gotten lost from that conversation. And I just wanted to highlight a few trends related to that.

You know, first, you know, for the average worker, we’re still in a recession-like economy when it comes to finding jobs.

Second, this is something that’s affecting all types of workers. This isn’t just for workers without a college degree. This is for workers whether or not they have a college degree. And I know there’s been a lot of conversation in the news about the issue of college loans and how important these degrees are to have to access job market, and while I agree that this is an important thing for workers to have, it’s still the case that people with a college degree are finding this labor market very challenging.

And finally, there’s a third trend that is related to the job market, which is that the jobs that are being added to the economy that are allowing the unemployment rate to tick downward, a large share of them are amongst sectors that pay below average wages. So an important thing to be looking out in all these job supports is the quality of the jobs that are being added to the U.S. economy. And what we’re seeing is that a large share of them are low-paying jobs.

So those are three trends I just wanted to talk a little bit about today.

NOOR: Can you give us your evaluation of the measures that have been put forward to address this lack of growth?

WICKS-LIM: Well, I think, you know, what seems to be happening is that there’s not a lot of conversation about measures to address this lack of job growth. And I think that, you know, it’s been feeling like the unemployment situation is something we can ignore just because the unemployment rate’s going down. But if you look at what’s been happening in the labor market, you know, for example, if you look at the employment-to-population ratio, that is, the proportion of people that are of working age who actually hold a jobs, the situation now is actually worse than it was in 2007 prior to the Great Recession, and it’s even worse than it was when we were just getting out of the last recession prior to the Great Recession, in 2001. So, you know, we’re–when I say that workers are facing a recession-like economy, I’m not exaggerating. The way the job market is today, it’s worse than it was even right after the 2001 recession. So this, I think, has been sort of largely forgotten in the national conversation about the U.S. economy, that workers are still struggling today.

And one number that’s kind of striking that I was looking at when I was just looking at, you know, the typical labor market data that’s put out by the Labor Department is the percentage of unemployed who are long-term unemployed. These are people who have been unemployed for 26 weeks or more, 27 weeks or more. And the proportion of unemployed workers that have been long-term unemployed is 40 percent. That’s double what it was in 2007, you know, right before we got into this terrible recession. And if you look at the actual levels, the numbers of workers, because we have many more unemployed workers today, you’re looking at three times the number of workers who have been long-term unemployed than existed in 2007. And so the situation is really still quite severe for workers today.

NOOR: So you do describe a very bleak situation, yet you also see fast food workers going on strike, calling for $15 an hour now in seven cities across the country in the last couple of months. And also even President Obama in his State of the Union address, he called for an increase in the minimum wage, which has not been increased, I think, for several years. What do you think about these efforts to at least increase the amount of money that low-wage workers are receiving?

WICKS-LIM: Right. Well, this is really interesting. I think that, yes, what you just said is true about the federal minimum wage. It hasn’t risen for several years now. It’s at $7.25 now. The last increase went into effect in 2009. It was a three-step increase that started in 2007.

And the fact that there are these strikes that you’re seeing against fast food chains–you’re even seeing strikes against the giant retailer Walmart–is a really interesting trend. And one thing that that got me thinking about was it seems like it could be related to the fact that the jobs that are being added to the economy are in these low-wage sectors. So if you look–again, this is Labor Department data. If you look at where the jobs are being added and you look at the top five industries that are adding jobs to the U.S. economy over the last year, for out of those five are low-wage sector. So you’re talking about, you know, the restaurant industry, talking about temporary help services, home care aides, home care services. Those kinds of industries are adding jobs.

And so in one sense the fact that these sectors are adding jobs may be giving these workers who are striking against the fast food chains and large retailers a little bit of support, because these–they’re not facing the threat from their employers that they’d be cutting back and laying off workers because of the economy. It seems that those sectors in particular are growing. You know. So there is a little bit of a silver lining with that, that despite the fact that jobs we’re seeing being added to the U.S. economy are in these low-wage sectors, what it does seem to be spurring, perhaps, is more activity amongst the workers in those sectors to try to boost their wages up.

And you’re right. There is more interest, it seems like, in raising the minimum wage. I just was testifying at a hearing in Massachusetts, where there’s a proposal on the table to raise the minimum wage in the state to $11 an hour by 2015. Connecticut just passed an increase in their minimum wage. And there are a couple of efforts going on nationally to raise the federal minimum wage. One in particular is trying to just restore the minimum wage back to its level just adjusted for inflation to what existed in 1968, which is around $10.50.

NOOR: And what are some measures that can be implemented to add jobs to the economy?

WICKS-LIM: Well, I think what you’re probably hearing from not just me but a lot of economists is that the main problem that is facing the U.S. economy: that there isn’t demand for the things that the U.S. economy is producing. And that isn’t just a matter of, you know, we have the wrong jobs in the wrong sectors. It’s that consumers are having a really difficult time, consumers, who are also the workers, who are having a difficult time in generating the consumer demand, the aggregate demand that helps the economy grow.

So in terms of measures, I think that we have to think about ways to find, to promote, to encourage demand, whether it’s in the private sector or the public sector. And one of the things that, you know, may sound a little bit like a drumbeat but I think is still true is we have a lot of demands in our economy, a lot of needs in our economy in terms of improving, restoring, repairing our infrastructure. Those are things that need to be done that could be done starting now, and those kinds of measures could help generate more jobs, more jobs here in the U.S., and give a boost to the U.S. economy where it’s sorely needed.

We still need to do something about the jobs crisis. The employment rate has been ticking down at 7.6 percent, but it is a much worse situation than it was before the Great Recession, and it’s a worse situation than it was even in the prior recession to that. So this is just a topic that seems to be waning from the headlines of news, that there’s a jobs crisis. And these measures, such as investing in our infrastructure, could help out in that.

NOOR: Thank you for joining us to discuss this very important topic.

WICKS-LIM: Thank you.

NOOR: And thank you for joining us on The Real News Network.


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