Barbell Jobs Market: A Few Get Rich, the Rest Tread Water
by Bonddad, Sat Apr 15, 2006 at 08:19:44 AM EDT
"Whenever someone has to tell you how good something is, beware." This is one of the best pieces of advice I ever got from my parents about life. And so it goes with the "miracle" of job growth under Bush II. The Right Wing Noise Machine (RWNM) is lamenting the public's jaundiced view of the economy, claiming the "liberal press" is out to get the president. (Never mind the fact that Fox news has the highest ratings of any cable news channel, or that right wing pundits have a near monopoly on AM talk radio). What the echo chamber fails to realize is people as a whole see the economy every day, and they don't like what they see. Therefore, their overall opinion of the economy and their respective individual prospects is one of concern, not hope.
The labor market's gains are beginning to take on the shape of a barbell, with growth weighted heavily at the two ends of the pay scale. During the current expansion, the bulk of new jobs have come in either the highest-paid of five broad occupational categories - management and professional - or the lowest-paid, services. Together the two sectors now account for more than half of all jobs. (The other three major categories are sales and office work, construction and natural resources, and production/transportation.)
First, let's look at total job creation. According to the National Bureau of Economic Research, this expansion starting in November of 2001. Since then the economy has created a total of 4,083,000 jobs. The Bush administration has routinely used May 2003 as the starting point for their job numbers, largely because this is when the lowest total number of jobs occurred.
According to the Bureau of Labor Statistics, leisure and hospitality job growth totaled 1,019,000 of the total jobs created, or about 25%. Also according to the Bureau of Labor Statistics, these jobs pay an hourly wage of $9.38/hour. This expansion has also created 720,000 construction jobs. These have a good pay scale of $19.64/hour. However, with new and existing home inventories at record levels, household mortgage at high levels, and home affordability at historically low levels it is doubtful this industry will be the source of secure jobs for more than another year or so. That makes 42% of the jobs created low paying or incredibly sensitive to economic cycles - hardly the sign of a great job market.
Two areas of the economy are responsible for over half of the total establishment job growth. The first of these is professional services, which have growth by 1,120,000 since November 2001. These pay $18.79/hour - a good number. However, these jobs have an important caveat. First, all require higher degrees. College education is mandatory and secondary study is commonplace. Considering the high level of educational debt now involved with higher education, these jobs are not the path to a better life, but instead the entranceway to the post-college debt trap. The college graduates graduate with a median amount of $20,000 in debt, with secondary post-graduate students having a higher level. These funding issues are making college far less accessible to all Americans, which in turn makes professional jobs less available.
Health and Educational jobs are the second strong area of job growth, accounting for 1,755,000 jobs since November 2001 or 42%. These jobs pay an average of $17.14/hour - another solid number. However, not only do these jobs also require a higher degree like professional services, but the pay scales within this category are highly stratified. These hourly wage is a combination of doctors (who make over fix figures) and the nursing home employee who makes far less. In other words, educational debt makes the top-paying jobs prohibitive for some, leaving the more numerous lower-paying jobs for most Americans.
Also of interest are the jobs lost during this expansion. The US economy has lost 1,616,000 manufacturing jobs and 456,000 information jobs since November 2001. This expansion has gutted two important high-paying industries that helped to define and support the middle class.
The bottom line is the economy is starting to create jobs in a highly stratified manner. Educational debt prevents the attainment of higher degrees from functioning as the pathway to a better life, instead creating a post-college debt trap for those who can deal with the debt. Lower-paying jobs are left - jobs that make a middle-class life impossible.