Low-Wage Jobs Dominate Employment Recovery

The median household income of Americans has not increased in a decade, when adjusted for what has been modest inflation. The poverty level has not fluctuated either, stuck around 16%. Those figures could get worse soon. The unemployment recovery, started at the depth of the recession, has added many more low-wage jobs than middle level or highly paid ones.

The National Employment Law Project (NELP) said of the low-wage recovery:

  • Lower-wage occupations constituted 22 percent of recession losses, but 44 percent of recovery growth.
  • Mid-wage occupations constituted 37 percent of recession losses, but only 26 percent of recovery growth.
  • Higher-wage occupations constituted 41 percent of recession losses, and 30 percent of recovery growth.

Today, there are nearly two million fewer jobs in mid-and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries.

The news should send shudders through those who believe a consumer-led economy is the only route to GDP growth levels of past recoveries — 4% per year or better.

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The data give some ammunition to those who believe the minimum wage is too low to pull millions of Americans out of poverty. These groups have argued that a new minimum wage should be set at $10.10, well above the pay of entry-level workers at huge employers such as McDonald’s Corp. (NYSE: MCD) and Wal-Mart Stores Inc. (NYSE: WMT). NELP research supports that growth in retail and fast-food jobs are among those that have outstripped higher paying ones:

Service-providing industries such as food services and drinking places, administrative and support services, and retail trade have led private sector job growth during the recovery. These industries, which pay relatively low wages, accounted for 39 percent of the private sector employment increase over the past four years.

If the conclusions are true, a very broad recovery in economic activity is not close at hand.

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