By LAM THUY VO and JOSH ZUMBRUN
from The Wall Street Journal
One refrain we hear often from readers of Real Time Economics is that the majority of jobs employers are creating are — in their words — not good, part time, temporary or seasonal minimum-wage positions offering scant benefits, mostly in the service sector.
“Nobody could live on just one of these jobs,” J. Thomas Gaffney wrote in a Facebook comment in March. “It’s not the quantity of jobs that matters, it’s the quality, and these jobs are not quality jobs that pay a living wage or provide decent benefits.”
Mr. Gaffney’s comments, and others like it, pose a difficult question: How do you measure the quality of all the jobs the U.S. added and lost in a given month?
The top line figure from the employment report masks all sorts of variation. Millions of Americans quit or are laid off each month, while millions are hired to new jobs. The monthly number of jobs created is the net total of all that underlying change. Some industries are losing jobs, others are gaining. Even within industries, some firms will be growing and some shrinking every month. Some jobs may only be a few hours a week, or have very low wages; others pay very well.
We took a cue from our readers’ comments and looked at job gains in various sectors and how much these positions pay on average. It’s an inexact calculation because people working in the same industry might be paid at wildly different rates. But by looking at the change in roughly 100 industry sub-sectors, this calculation gives a clear picture of whether it’s been high-wage or low-wage industries that have added jobs since the recession started.
What Mr. Gaffney assumed is partially correct. It’s true that since 2007, job growth has come from a large range of fairly low-wage sectors. The food and drinking services industry, which includes most bars and restaurants, has grown by 17% — while average weekly pay in this industry is only $339 a week. Home-health care services — mostly home-health aides — has grown by an astonishing 48%, but the average weekly pay is only $548.
It’s also true that many of the shrinking industries have been middle wage. Specialty trade contractors — which includes many construction workers — has seen employment fall by more than 10%. Those jobs paid more than $1,000 a week. Other middle-wage jobs losing employment include many manufacturing industries.
But it’s far from the case that all the new jobs have been in low-wage industries. These higher-wage industries have been adding jobs at a brisk clip: computer systems design and related services (an industry that includes many software developers and pays $1,731 a week on average), other information services (which includes many internet companies and pays $1,357 a week), management and technical consulting ($1,434 a week) and hospitals ($1,133 a week).
Overall, the data also show that more people work minimum wage or involuntarily part time than prior to the recession. But most of this increase occurred during the recession in 2008 and 2009.
The number of minimum wage and part time workers has declined over the past five years. There are currently about 2.6 million workers earning the minimum wage. That’s up from 1.7 million in 2007, but down substantially from 4.4 million in 2010. There are currently about six million people who work part time but want full-time hours. That’s up from about four million in 2007, but down substantially from nine million in 2009 and 2010.
So were all the jobs we created since the recession bad? Well, yes and no. It’s true that many low-wage industries have been growing, many middle-wage industries have shrunk, and more people work part time or for minimum wage than did a decade ago. But it’s also true many middle- and high-wage industries are growing too, and the number of minimum wage and part-time workers has gradually been declining over the past five years.