Helping depress the overall wage level have been pay cuts experienced by the minority of workers who have been able to find new full time jobs following their layoff between 2001-04. According to the BLS, there were nearly 10 million jobs lost during this period (not including so-called “voluntary” layoffs by early retirees taking severance packages). Of the 45% who subsequently found work, most (52%) were forced to accept lower pay. Full time jobs coming out of previous downturns generally paid more. As Uchitelle notes, the long-term trend of stagnating and falling real incomes has returned after a brief interruption during the tech-driven boom of the 90s.
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It's Not New Jobs. It's All the Jobs. By Louis Uchitelle New York Times August 29 2004
OW that the work force is growing again, President Bush and Senator John Kerry have been arguing about the quality of the newly created jobs - whether a majority are toward the higher or lower end of the wage scale. That is the wrong debate. The real issue is not how well the new jobs pay, but whether the incomes of workers in general are rising or falling. On the second score, there is not much to debate. The incomes of most workers, adjusted for inflation, are sinking.
The evidence for this assertion is piling up. The Census Bureau weighed in last week with the latest update on family and household incomes. Both declined through the first three years of the Bush administration. From the Bureau of Labor Statistics comes a similar story for individual workers. Whether the measure is median weekly pay or average weekly pay, the increases have been too small since last summer to keep up with a measly climb of 1 percentage point in the inflation rate.
"That is true across nearly all full-time wage earners," said Mark Zandi, chief economist for Economy.com. Lower-end workers have taken the biggest hit, but people at the higher end - earning as much as $75,000 a year - are hurt, too. "The job market is still very weak," Mr. Zandi said, "and employers have the upper hand in negotiations."
Against this backdrop, the two presidential camps have spent an inordinate amount of time on a minor point, the quality of the 1.5 million jobs that have been created since last August. That is a minuscule slice of the 131.3 million jobs in the overall work force, and we know less about the new jobs than we do about the work force as a whole, which is clearly losing ground.
Government data do tell us that a majority of the new jobs are in industries and occupations at the lower end of the wage scale - restaurant workers, for example. What we do not know from this data is the pay for specific jobs. A cook at a fancy restaurant earns much more than one at a diner. Yet both are put in the same classification by the Bureau of Labor Statistics.
Mr. Kerry argues that a majority of the new jobs are low-paying "bad jobs." But that overstates the case. The data suggest that he is probably right, but not with the certainty he asserts. The Bush camp, on the other hand, argues that the quality of the new jobs is unknowable. Or as N. Gregory Mankiw, chairman of the president's Council of Economic Advisers, wrote recently, "Different analysts using these imperfect data can reach wildly different conclusions.'' But that dismisses too easily the evidence that a majority of the new jobs are in industries and occupations that generate low-wage work.
Income, meanwhile, sinks for the work force as a whole. Much more definitive numbers, ignored so far by both candidates, make that point vividly. This set of numbers deals with laid-off workers. There were 9.86 million wage earners who lost full-time jobs from 2001 through 2003, the Bureau of Labor Statistics reported last month, releasing the latest results of a survey conducted every two years.
That dwarfs the recent job creation, and the survey captures only people who acknowledge having been laid off. It misses the disguised layoffs, like forced early retirements, which are proliferating.
Forty-five percent of the 9.86 million were back in another full-time job by the time of the survey, or 4.4 million people. Of those, 52 percent earned less than they had at their last jobs. The 1994 and 1984 surveys covered similar periods of recession and recovery, yet the percentages of the re-employed earning less in their new jobs were lower - 47 percent in 1994 and 42 percent in 1984.
LOSING ground is a disheartening experience. On a broader plane, it contributes to the wage stagnation and income inequality that have characterized the last 30 years. Both are reappearing after a hiatus that started in the mid-1990's and lasted more or less until 2002.
Yet Mr. Bush and Mr. Kerry fail to spotlight this alarming downward trend, from which they could segue into a debate over how to ameliorate the income deterioration. A higher minimum wage would probably help. So would an expanded government role in providing health insurance, relieving employers of some of the rising cost. Perhaps some or all of the money saved would go to wage increases.
Mr. Kerry embraces these positions much more than Mr. Bush, who prefers to let the marketplace solve wage and employment problems, allowing a minimum of government intervention, except tax cuts. These are huge differences, yet the candidates become sidetracked in debates over the quality of 1.5 million newly created jobs and fail to pound away at each other in the main event - how to arrest declining income in the vastly larger work force.
http://www.nytimes.com/2004/08/29/business/yourmoney/29view.html?pagewanted= print&position=