Tuesday, November 12, 2013
Trends and challenges for low-wage workers.
Many workers are facing uniquely tough times. Though now below its
recessionary peak of 10 percent in October 2009, unemployment remains high at
8.2 percent, and job growth is slow. With around 25 million people unemployed
or underemployed, it is clear that the jobs crisis did not subside with the official end
of the recession. Moreover, workers are still suffering from difficulties that materialized
in the decades before the Great Recession, such as deteriorating job quality and
stagnant wages. The economic expansion from 2001–2007, for instance, was among
the weakest on record; typical family incomes grew by less than one half of one percent
between 2000 and 2007 (Bivens 2011). These economic challenges are particularly
acute for workers at the bottom of the wage scale.
This paper focuses on low-wage workers—who they are, where they work, where
they live, and what their future challenges may be in regards to education/skill requirements,
job quality, and wages. Analysis of employment projections from the
Bureau of Labor Statistics (BLS) reveals that the future of work will be shaped by much
more than labor market skill demands. And in the future, rising wages will depend more
on the wage growth within occupations than on any change in the mix of occupations.
This briefing paper begins by providing an overview of the jobs crisis facing American workers
a crisis that must be resolved if low-wage workers are to experience brighter labor market
prospects. It then explores the racial/ethnic composition and education levels of the
low-wage workforce. Next, the briefing paper examines which states have the highest
and lowest shares of low-wage workers. Following this is an analysis of which of
the 22 occupation groups identified by the Bureau of Labor Statistics have the highest
and lowest shares of low-wage workers, and provides an overview of how overall
employment in those groups is expected to change by 2020.
It then turns to a discussion of how overall education, training, and work-experience
requirements of the U.S. workforce will change between 2010 and 2020.
The paper concludes by explaining why any focus on increased access to good
jobs for low-wage workers should be less concerned with educational attainment
or changes in the skill demands of the labor market, and more concerned with
a range of policy-related issues that affect job quality—namely, the stagnating
value of the minimum wage, the erosion of health and retirement benefits,
and the decline in bargaining power of American workers.
Key findings include:
* Female, young, and minority workers are overrepresented in the ranks
of low-wage workers, when “low-wage” is defined as below the wage that a
full-time, full-year worker would have to earn to live above the federally
defined poverty threshold for a family of four. (In 2011, this was $23,005 per year,
or $11.06 when adjusted to hourly wages.)
* In 2011, only 31.5 percent of low-wage workers lived in households with a
family income greater than $50,000, indicating that low-wage workers are not
predominately teenagers living with their parents or adults with low-paying jobs living
with a higher-earning spouse.
* In 2010, Mississippi and Tennessee had the largest share of workers earning wages
that put them at or under the official poverty threshold for a family of four, at 33.7 percent
and 32.8 percent, respectively. The District of Columbia and Alaska had the smallest
share of workers in this category, at 11.6 percent and 17.5 percent, respectively.
* In 2010, food preparation and serving related occupations had the largest share
of workers earning a wage at or below the poverty level
(73.6 percent, or almost three-fourths).
* An analysis of the education and training levels projected to be necessary
for the labor force of 2020 shows that jobs will not require a significantly greater level of
education or training than workers currently possess. Therefore, a simple increase
in the share of workers with a college degree will not ensure that tomorrow’s
economy generates better and more equitable outcomes than today’s economy.
* Workers of the future, particularly low-wage workers, will only experience rising living
standards if the policy status quo is replaced by more-progressive tax
and transfer policies, increases in the real value of the minimum wage, a reversal
of falling unionization rates, an expansion (and definitely not a retrenchment)
of publicly financed social insurance programs, and, crucially, a real commitment
to full employment.
A bright future of work for low-wage workers begins with quickly lowering
the unemployment rate by solving the current jobs crisis.
Though the Great Recession is technically over, for many unemployed and
employed Americans it does not feel that way, largely because strong and
sustained job growth has yet to occur.
The economy needs to create 9.9 million jobs just to fill the jobs deficit1
a daunting task for a nation struggling to create enough jobs to keep pace with
monthly population growth (Shierholz 2012). As of March, the unemployment rate
was still 8.2 percent, and 42.9 percent of unemployed workers had been
unemployed for six months or longer (Shierholz 2012b).
The underemployment rate, which includes workers who are unemployed,
marginally attached, or involuntarily working part time, is 14.5 percent (Shierholz 2012).
Polling has indicated that unemployment has affected large swaths of the population.
In Democracy Corps polling from June 2009 to June 2011, the share of respondents
who stated that either they or a family member had experienced unemployment
hovered around 40 percent (Mishel and Shierholz 2011).
One of the best ways to improve conditions for low-wage workers is to lift their pay,
and one of the most effective ways to accomplish this is by generating good jobs
in an economy with a tight labor market (Mishel, Bernstein, and Shierholz 2009).
History shows that full employment which is the utilization by the labor market of
virtually all willing workers lifts the living standards of working families because
lower-wage workers in very tight labor markets gain the bargaining power to
demand higher pay and/or better working conditions. As Bernstein and Baker (2003)
write in The Benefits of Full Employment, the labor market of the mid- to late 1990s,
which operated at or near full employment, helped reverse a decline of real wages
for many workers, benefiting even those toward the bottom of the wage scale.
Measures of wage inequality, in fact, slowed their rise in the late 1990s. The 1990s
also saw, for the first time in a generation, incomes of the workers at the bottom
of the scale growing more quickly than incomes of workers in the middle of
the income scale.