Is the Jobs Picture Finally Back to Normal? Not Really
The most recent employment report held some good news: the economy added another 217,000 non-farm jobs to the economy in May, on top of the 282,000 created in April. Finally, it seems, job creation is back on track, hitting monthly levels not seen since the onset of the Great Recession - and getting back the eight million jobs lost during those bleak years after the financial crisis.
That's wonderful, right? Surely, but there remains a small problem: Why, if everything is back to pre-recession levels, is the unemployment rate still sitting at 6.3%, rather than the much daintier 5% recorded in January 2008?
Labor participation rate still lethargic
As some analysts have noted, just counting jobs isn't enough to paint a fully realized jobs picture. Since the recession, millions of working-age adults have entered the economy, all looking for jobs - about 15 million, according to the New York Times, noting that the labor participation rate is still below 63%.
The folks at the Economic Policy Institute concur, adding that even those stellar new numbers leave the U.S. economy with a deficit of about 7 million jobs. The Hamilton Project at the Brookings Institute charts the jobs gap every month, going so far as to compute how long it will take to close that 7-million job deficit. Even with a consistent monthly influx of 208,000 jobs, the gap will likely persist until August 2018.
I don't want to be a Gloomy Gus, but that means that it will probably take a full 10 years before we are back to pre-crisis employment levels. That's lousy enough, but taking a look at the actual jobs being created to supplant those that have been lost is even more depressing.
Low-wage positions are taking over
While many of the jobs lost since 2008 have been well-paid, mid-wage positions paying between $14.00 and $21.00 per hour, the jobs that have proliferated more recently are not quite as lucrative. A recent study by the National Employment Law Project shows that low-wage jobs made up 22% of all job losses during the recession, but have roared back to make up 44% of new job growth.
Meantime, the report noted that high-wage and mid-wage jobs suffered losses of 41% and 37% respectively, while only contributing 26% and 30% to post-recession job gains.
This new reality is very likely behind the recent calls for a hike in the minimum wage. In the late 1970s, 27% of minimum wage workers were teenagers. Nowadays, the average age of a minimum wage worker is 35 - and 88% of them are 20 years of age and older.
Don't get me wrong. Stronger job growth and a recovering economy is great news, and long overdue. But the nature of the economy - and the type of employment it creates - has indelibly changed, leaving working Americans worse off than ever.
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