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More Jobs But They Pay Less

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More Jobs But They Pay Less

More Jobs But They Pay Less
February 20
19:14 2020

The United States is enjoying historically low unemployment – but at what cost? People are hard at work, it’s true. Unfortunately, wages haven’t been rising along with the worker numbers.

The October 2019 Job Openings and Labor Turnover Survey (commonly called the “jobs report”) indicated a 235,000 increase in job openings to 7.3 million. There were more job openings than unemployed people, so much so that some began to rejoin the labor force after a lengthy absence.

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After 10 years of growing employment, the jobless rate is a low 3.5 percent. There is no question that job openings now outnumber prospective employees with suitable skills. However, do those with jobs earn enough money to support themselves and their families?

A Brookings Institute report said over 53 million U.S. residents between the ages of 18 to 64, representing 44% of all workers, earn low hourly wages. Many of them were young parents:

“More than half (56 percent) are in their prime working years of 25-50 and this age group is also the most likely to be raising children (43 percent).”

About 25 percent of low-wage workers are single wage-earners in their households who must come up with 100 percent of the economic support.

This is hard since almost one in three lives 150 percent below the federal poverty line (about $36,000 for a family of four) and every other low-wage earner holds a high school diploma or less schooling. Their median hourly wages are $10.22 with median annual earnings of approximately $18,000.

Economies with a majority of low-paying jobs are undesirable for many reasons. For one thing, when wage increases don’t keep pace with inflation and rising housing costs, evictions and foreclosures rise. Poor neighbors who are struggling to make ends meet often sacrifice yard and maintenance services out of financial necessity. Property values in the area decline, lowering the taxable income base.

The hiring conundrum today is that people without college degrees comprise the majority of the labor force and this makes them ineligible for better-paying positions.

Training and education courses have proven effective in opening the door to more lucrative labor. But governments and private corporations shy away from the expense of starting up and operating ongoing employee development programs.

According to PEW, some U.S. states are getting more aggressive about luring future employees by “offering financial incentives to entice prodigal natives to move home and raise families. They’re also reaching out to discouraged workers who don’t show up in the record-low unemployment rate because they’ve given up seeking jobs. Among them: people with outdated skills, high-school dropouts, and those with criminal records.”

The federal Bureau of Labor Statistics reported that, in June 2019, 39 states had more jobs than prospects. North Carolina led the pack with the highest 5.7 percent of job openings unfilled. Missouri, North Dakota, and Virginia lagged slightly behind at about 5.3 percent of job openings still open.

In August, federal statistics said that there were 7.1 million job openings and 6 million unemployed job-seekers.

Jed Kolko, a chief economist at Indeed, commented on the dwindled middle class in America:

“There’s been growth in high-wage jobs in tech and finance in big cities and there’s been a similar surge in jobs at the lower end – but the middle has hollowed out, primarily due to the collapse of manufacturing.”

In December 2019, 60 percent of U.S. corporations predicted they most likely would reduce their staffing in 2020. Federal trade policy and the fears over the ongoing Chinese coronavirus outbreak are prompting employers to lower their headcounts.

In addition, skilled workers are in such high demand that they are more likely to quit for greener pastures – competitive employers. Employee retention has become a major corporate challenge, as companies may be unable to hire new applicants fast enough to maintain the overall headcount number, much less raise it.

Another key element in the complexity of American employment is the expanding role of automation. Human workers are being trained to operate robots performing tasks formerly carried out by humans. Experts believe that automation will have the most impact on white-collar jobs such as routine clerical roles and administrative tasks in professional settings.

Add to all of that natural disasters. Construction business owner Tiffany Evans in Wilmington, North Carolina, cited fewer skilled migrants, youth disinterested in a blue-collar career, and havoc wreaked by Hurricane Florence last year as major challenges to the prevailing building boom:

“You got 30 houses under contract and now it’s taking three months before you can get guys to do the siding. It’s a slow trickle of taking longer with less [sic] people.”

Employment statistics trumpeted as triumphs may hide a complex and much shadier picture of the real American worker, a single parent who is working three low-paying jobs to support a family of four.

Investing money in employee training and education programs plus bringing back middle-class manufactury could pay off by raising the value of U.S. products and services. Increased value translated into increased sales revenues could allow employers to offer higher wages to their knowledgeable and skilled workforce.

Where’s the downside here?

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1 Comment

  1. RandyH
    RandyH February 24, 21:25

    A big job fulfillment problem overlooked by most intellectuals is our youth not being taught to value “factory” and “skill” labor jobs as valuable careers. Everyone cannot be the boss nor can the country run on white collar jobs alone. Blue collar jobs let you forget the job when you get home to the family and greatly reduce illness inducing stress. Reducing small business and manufacturing job taxes and regulations makes room for $20-$25 an hour jobs with great benefits–as long as we also have fair trade deals to stop subsidized foreign competition. President Trump’s USMCA deal will do a lot to make this a reality. Then we just need to remove the imposed stigma of being blue collar, and stop pushing our children to get meaningless degrees just to have one.

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