Editorial: Help Wanted for Economy; Too Many Jobs Are Low-Wage
Last week’s U.S. jobs report was a mixed bag of mediocre and bad news. Yes, the economy added 162,000 jobs in July, and the unemployment rate fell from 7.6 percent to 7.4 percent, the lowest level since December 2008.
But the number of jobs added by employers was the lowest since March, and more than half the job gains were concentrated in the restaurant and retail sectors, where wages tend to be low and employment part-time. More worrisome yet is that 40 percent of job growth over the past year has occurred in low-wage sectors, and the portion of Americans working part-time has been trending upward this year and shows little improvement from the height of the Great Recession. An estimated 60 percent of $15- to $20-an-hour jobs were lost during the recession. Only 20 percent have come back, while the rest are being replaced by jobs paying less than $13 an hour, as New York Times columnist Mark Bittman recently pointed out.
The practical effect of this is weak income growth: Average hourly wages in July increased only 2 percent over a year earlier. And that, of course, is symptomatic of growing income inequality, which, despite what some in Washington seem to think, is the country’s most pressing economic issue.
In this context, it has been heartening to see thousands of fast-food workers across the nation staging one-day work stoppages during peak mealtimes in recent weeks to draw attention to their demands for a living wage — $15 an hour, twice what many of them now earn.
In this effort, they have been aided and abetted by, of all people, McDonald’s (we’re assuming here that corporations are people, as the U.S. Supreme Court would have us believe). McDonald’s helpfully created and posted on the web a sample budget for its employees that inadvertently but convincingly demonstrated that it is impossible to live on a minimum wage income. In setting out to do the opposite, the McBudget assumed a monthly income based on two jobs and monthly expenditures that included $20 for health insurance, $50 for heating, and nothing for food, clothing, child care or gasoline (although it did assume car payments).
It has long been argued, of course, that minimum wage jobs are filled mostly by teenagers who are also attending school, and that it is misleading to assume that anybody actually tries to live and support a family on a minimum wage job. There is something to this: Minimum wage workers accounted for about 2.3 percent of the work force in 2011 and about half were under the age of 24. But looked at another way, the numbers tell a very different story. The median age of a fast food worker is about 29, and 40 percent of minimum wage earners are in the prime working years of 25 to 54. By way of further context, as the Atlantic reported recently, 7.2 percent of American workers live below the poverty line, a far larger number than those who earn only the federal minimum wage of $7.25 an hour.
Most observers think that the rolling fast-food strikes, backed and bankrolled by the Service Employees International Union, are not the harbinger of an attempt to organize these workers. For one thing, there are something like 4 million of them spread out over 200,000 locations, so the cohesiveness essential to effective union activity is lacking. But as an attempt to call attention to the need to raise the minimum wage, the stoppages might be more effective. We hope so, but we also would argue that the bigger issue here is that the U.S. has to focus its efforts on creating full-time jobs that pay decent wages, not more part-time, low-wage positions in which people can become mired for years due to lack of other economic opportunities. That’s the prescription not only for promoting human dignity and upward mobility, but also for re-establishing a growing economy in which consumers’ purchasing power plays a dynamic role.