The United States lost about 8.1 million jobs after the recession began in late 2007. The economy has since recovered about 3.3 million of those jobs, starting in early 2010. That, in itself, should alarm policymakers. The labor market is still in a deep, deep hole.
But in some respects, the situation is even bleaker than that. The types of jobs that have come back so far don’t seem to be paying as well as those that were lost.
A new report (pdf) from the National Employment Law Project finds that low-wage jobs, paying $13.83 per hour or less, have dominated the recovery to date. In many cases, they appear to be replacing higher-paying jobs that were lost in the first place.
The NELP report finds that mid-wage jobs, paying between $13.83 and $21.13 per hour, made up about 60 percent of the jobs lost during the recession. But those mid-wage jobs have made up just 27 percent of the jobs gained during the recovery to date. By contrast, low-paying jobs have constituted roughly 58 percent of the jobs gained since 2010:
Nearly 40 percent of the jobs gained since the recovery began — about 1.7 million — have come from three low-wage sectors: food services, retail, and employment services (the latter is a sweeping category encompassing jobs like office clerks and sales representatives).
Meanwhile, many mid-wage industries, such as construction, manufacturing, insurance, real estate, and information tech, have either stagnated or grown too slowly to make up for their pre-recession losses. What’s more, the report notes, budget cuts to state and local government have taken away a major source of mid- and higher-wage jobs. Here’s a chart showing the mid-wage industries that have been slowest to recover:
Note that many of those mid-range industries — including carpenters, painters, and electricians — seem to be a casualty of the still-struggling U.S. housing market.
The NELP report helps to explain why many American workers who lost their jobs during the recession are now returning to work at lower wages than they earned before, as the Bureau of Labor Statistics recently found.
What’s more, the report notes, if this trend continues, it’s likely to exacerbate income inequality in the United States. Over the past decade, high-wage and low-wage jobs have been growing at a decent clip. But that middle rung continues to get hollowed out. Mid-wage jobs took a big hit after the 2001 recession, largely stagnated during the 2000s, and they’ve now declined even further in the most recent crisis. (See this graph for a look at the historical trend.)
“In short,” the report notes, “America’s good jobs deficit continues. Policymakers have understandably been focused on the urgent goal of getting U.S. employment back to where it was before the recession (we are still missing nearly 10 million jobs), but our findings underscore that job quality is rapidly emerging as a second front in the struggling recovery.”