Where have all the high-paying jobs gone?
The labor market is slowly recovering, but with low-wage jobs. The US has lost at least 3 million high paid jobs forever.
By James C. Cooper, The Fiscal Times
The U.S. labor market has been looking stronger in recent months. Since jobs began to increase in early 2010, private-sector companies have added two million workers, with the overwhelming bulk of the gains coming from small businesses. So far this year, payroll increases have accelerated to 214,000 per month, the strongest four-month pace in five years.
But there’s a catch. The quality of the jobs the U.S. is creating right now in terms of pay, benefits, hours, and skills leaves a lot to be desired. The problem is not only the depth of the recession and the sluggishness of the recovery. It also reflects the changing structure of the U.S. economy, as more manufacturing operations shift to overseas locations, while service businesses, which often pay much less, take a more dominant role in job creation.
Previously high-paying jobs in manufacturing have gone the way of the Edsel. U.S. factories lost 3 million jobs from 2000 to 2004, jobs that did not return during the boom leading up to the recession, along with another 2.2 million from 2007 to 2010. Those are unlikely to come back, as well. Manufacturing jobs were 20 percent of private-sector payrolls in 1990, 15 percent in 2000, and just over 10 percent in April. Large multinational corporations have cut 2.9 million U.S. jobs over the past decade, while adding 2.4 million workers to their overseas operations.
Factory pay is now below average
More important, pay in manufacturing is not what it used to be. Hourly earnings of production and non-supervisory workers, which had held well above the private-sector average for decades, slipped below the average in 2006, and the ratio continues to trend gradually lower. In 2004, factory pay was about 3 percent above average. In April it was 2.4 percent below the $19.37-per-hour private-sector mark for production workers.
The recovery, so far, has generated a majority of lower paying jobs. Economists at UBS, who track payrolls in industries where hourly wages are above the overall average vs. sectors with pay below the average, say that job growth in low-wage industries has been generally faster since the recovery began in mid-2009. In particular, job gains in the retail-trade and leisure-and-hospitality sectors, where hourly pay is 32 percent and 43 percent, respectively, below the average for all private-sector employees, have accounted for 27 percent of this year’s job growth.
At the other end of the pay scale, and in addition to the 5.2 million jobs already lost, the recession wiped out nearly three million high-paying jobs in construction and finance, where average hourly pay is 11 percent and 20 percent, respectively, above the $22.95 average for all private-sector employees, which includes both production workers and management. Those jobs are not coming back any time soon, if ever. One bright spot has been professional and business services, including legal, accounting, computer systems design, and consulting. Jobs there typically pay 20 percent higher than average, and they have accounted for 30 percent of all private-sector job growth over the past year.
Small businesses hiring, but offering few benefits
The big contribution to hiring by small business has been a blessing and curse. Since payrolls started to grow again in March 2010, companies with fewer than 500 employees have accounted for 97 percent of the growth in private-sector jobs, based on data from Automatic Data Processing. Companies with fewer than 50 workers have contributed nearly half, while growth at big firms with greater than 500 employees has been negligible. However, small companies don’t generate as much income per worker, as bigger outfits, and offer far fewer benefits.
Small business hiring remained strong in April, but pay growth was sluggish, according to the Small Business Employment Index, developed by economist Susan Woodward with Intuit, a provider of payroll services for small and medium size businesses. The Intuit gauge covers companies with fewer than 20 employees, where employment has risen by 845,000 since October 2009, the company says. But over the past year average monthly pay has risen only 1.6 percent, to $2,653. "This upward trend is partly due to hourly employees working more hours while their hourly wages remain flat," says Woodward.
Given the unusually large slack in the labor force created by the recession, hourly pay across almost all industries is barely rising. Average hourly earnings for all private-sector employees in April were up only 1.9 percent from a year ago, according to the Labor Dept., close to the annual clip in late 2009 and below April’s 3.2 percent inflation rate. With 13.7 million people -- 9 percent of the labor force -- officially unemployed and another 10.6 million either too discouraged to seek work or forced to work only part time, it’s going to be a buyer’s market for a long time.
An economic recovery will not by itself lift the quality of U.S. jobs. Economists know that workers are paid based on the value of the products they make and their contribution to a company’s production. That’s a long-term problem requiring policy efforts that support investments in research and innovation, as well as human capital, which reflects education and skills. Such efforts will be key considerations as policymakers battle over how to cut future budget deficits.
More stories from The Fiscal Times:
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"Factory jobs are not viable" - false. They are not viable when run by incompetent people who are lost in a factory as well as delegating responsibility to engineering directors and anyone outside of their business text books. Such are most business people today.
My company does all our manufacturing in the US, with multi-million dollar sales projections and profit margins of almost 30% net!! AND, my premier product is competitively priced below $30 and is of much higher quality than the junk manufactured offshore. IT CAN BE DONE! DON'T BE MISLED. We can create these jobs.
Where have all the high paying jobs gone. They haven't gone anywhere they are now low
paying jobs. A great way to go for banks, wall street and big corporations. For average Americans it's a sure path to disaster.
If we don't get a government that will check this insane greed we ill soon be in depression and chaos. Simply forcing our public owned corporations to pay our minimum wages wherever they go would bring back millions of jobs. This government is not ignorant of many obvious ways to stem outsourcing; The fact is they have aided it in every way possible.
Banks, wall street and big corporations love slave labor and they own our government. Our corporate and financial systems are a disgrace to America, our service men and all our citizens that are not morally and spiritually bankrupt.
I just love how every one of these articles written by these children all say that we MUST get to school and get higher education. Well, that USED to be the ticket, when I was a youngster. NOW, we have education that costs way too much, people graduating with debt they can't even begin to pay back and NO JOBS waiting when they do graduate from ths higher education we MUST HAVE!
Again, who writes these things?
Something that I've never seen mentioned is this. Back in US manufacturing's heyday, the vast number of manufacturing jobs were not plum jobs. Big industry, like autos & steel, paid well, but there were innumerable factories across the nation that paid minium wage. I worked in a factory that made chainsaws. That was when minimum wage was $3/hr. Top wage for the blue-collar workers was $7.50/hr. My cousins worked at various factories.... one at a company that made plastic containers for industrial use. She made $5/hr in the 1960s & 1970s. Another cousin had a really good job with Pfizer... at $10/hr.
The reason these wages provided decent livings to families in which the wives often were stay at home moms is that the real cost-of-living was much cheaper. We were not spending exhorbitant amounts on health care (In the 1970s, I paid $30 for a dentists visit with Xray & fillings). We were also not over-spending on all the tech stuff. One had a radio, TV or 2, a record player, & a telephone. There was not the constant upgrading & subscription plans. TV, radio, & stereo were the costs of the devices themselves, & got replaced when they broke. So, you had defined costs for everything. One did not buy something, then continue to pay to be able to use it.
Technology is changing so rapidly that something is outmoded before it leaves the store. Therefore, our wages have not kept pace with our cost-of-living... because our lives have changed. At this rate, I'm not sure wages will ever keep up with costs.
I've tried to do without most of it becuase I find the constant changes a distraction & quite annoying. I have a cell phone, for which I pay $25/90 days. It is for talking, not texting, surfing, etc. However, I'm being pressured to get a Smart Phone for work purposes. I'll be the one who has to pay the contract, even tho' it will primarily be used for work. Sorry, they don't provide phones or pay the contract... write it off on your taxes. I suppose that's the answer, but in the meantime, that's another cut out of my wages.... & since I'm mostly a freelancer, I'm continuing to pay between jobs.
Therefore, when everyone compares wages as they were vs as they are... the real factor is the changes in our lives..... if our lives were as they were in the 1950s & 1960s, our wages might not look so bad. Instead, people make due with credit cards... rather than trying to do w/o.... & the real blood-sucker is technology.... phones, IT, health care, etc... some of which has become a greater necessity than having a roof over one's head.
Now everyone everyday uses his technology thousands of times a day and think he's a scientific rock star even if they can't understand even the basic premise of his theories.
We have physicists today who can't even get a measly government grant to solve some of our most pressing problems; yet Snooki gets paid $100K plus per week to act like a complete moron.
People lap up Snooki's crap because she entertains the simple and stupid among us with her stupid nonsense. Yet a physicist who has come up with a way to make space exploration possible doesn't get the money he needs because people are too bored because the math equations hurt our head.
That mentality is at the root of what makes America a laughing stock to the rest of the world.
If you add the unemployment numbers from the article: 13.7 million + 10.6 million=24.3 million or 16% of the adult working population in the US. 16 freaking percent of the country is out of work! Yet all you ever hear on the news is how good the stock market is performing...
"When GM was bailed out, the average worker made $83/hr. "
That's might be true. You did not specify if this was labor. If you add the executive payroll to the formula, it probably is a ridiculous figure. But this is NO WHERE near close to what a factory worker earns. Some of my family worked on the floor at GM and they did not get paid $172,640 a year. Try more like $30k a year, and that was with 20 years in.
Finally, an article that says what I've been saying since the IT bust in 2002...there may be jobs, but they're in retail, services, and temporary assignments. Which mean $9/hr, no or very little in the way of benefits. Not jobs that will pay enough to raise a family on - and not enough to allow us to pay back all the student loans we took out for the (we now realize) entirely worthless college degrees we worked for years to get. Why do we go to college? To get educated, trained, etc to get a good job, with a wage to raise a family on, and hopefully give something back to society.
Instead the reality is we go to college so we can work at Wal-Mart (or similar), 'cause that's the only place that's really hiring. What a sad state of American affairs.
FOLLOW THE MONEY STUPID -- ALL OFF SHORE!
We need a USA First President and Congress NOT a Bunch of Paid Off Lawyers!
Some good posts here and I think the American people are starting to wake up to the "new reality". However I also believe its too late. This generation will not see things get any better. The way of life we knew even 15 years ago is GONE!
You who are still arguing political parties still do not get it. YOU are part of the problem! While blaming the Reps. or Dems. you have become just like the crooked politicians that are sucking thiscountry dry before your eyes!
The education system is broken. Education is poorly managed and top-heavy, just like too many industries in America. Instead of the Executive taking a pay cut for mismanaging funding or making a poor decision, the worker is docked, fired or their job is migrated overseas.
If the people are waiting for leadership or politicians to do the right thing, then we are all screwed. America only gets serious when the people ('victims') force the hand of the politicians to do what the people want. The problem is that the politicians keep people from working together by skewing the issues and saying the "other" party is what is the cause of all the problems.
In this way nothing substantial ever gets done, and the people don't amass, work together to usurp the broken leadership in this country and change what needs changing.
It's the "Political Will" to change that is missing from the people. People will not change if it means they have to sacrifice and can't see how they will share in the glory of that change. It's far easier to complain than it is to actually do something about it...
Dave, NAFTA has nothing to do with jobs going overseas. Jobs going overseas is a result of: A) cheap labor force (as is the case with china and much of south east asia). B) corporate leadership greed (forcing value to respond to quarterly processes and making long term decisions based around short term goals). Or, C) the lack of community investment in "training", "schooling" and "re-training" that exists in numerous.
People love to complain about problems, but lack the spine and will to sacrifice and change what is broken.
There are a great many things to love about America, unfortunately the vast majority of our education, healthcare, social security and handling of our internal infrastructure systems are horribly expensive and cumbersomely uncompetitive with nearly every other civilized country.
We have to stop being the world's policemen and cut our spending on defense in half. We have to rein in on our business leaders and force them to invest in American jobs or lose all advantages and privileges in this marketplace (or even wrest control, in the case of monopolies).
Finally, the rich in this country need to have their free pass revoked permanently. The rich need to sacrifice even more than the average person, because they live in a country that allows them this much freedom and it's well overdue that they start acting like patriots and pay their fair share, instead of funding the terrorists with their surplus gains.
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