Low wage recovery highlighted by 7 out of 10 jobs added in January coming from minimum wage waiters and temporary retail workers.
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The unemployment rate fell below the 5 percent mark for the first time since the Great Recession wrecked havoc on the economy. This is good news right? Well the stock market didn’t think so for a couple of reasons. First, this adds more fuel to pushing interest rates higher (a big expense on the $19 trillion we already owe). Second and probably more importantly, it highlights the growing trend of low wage employment. 7 out of 10 jobs added in January came in the form of low wage jobs. We added 58,000 in retail and trade (i.e., Wal-Mart and Target work), and 47,000 in the food trades (i.e., waiters and bartenders). With states pushing minimum wages up, this is where the income gains came from but we are talking about a weak jump brought on by the low range of the curve. This is why the casino known as the stock market took a dive despite this seemingly good news. Is this a problem that most of our job growth came in the form of low wage work?
Low wage recovery
The Hallmark of this recovery has been the growth of low wage jobs in place of higher paying work. Good jobs with benefits disappeared since the Great Recession hit only to bring on an abundant number of low wage jobs. This is how the middle class became a minority in the United States. When 70 percent of the jobs being added are low wage jobs, there really isn’t much to celebrate:
This is troubling because it highlights the economy being more efficient at adding low wage jobs without the prospect of better paying jobs. In other words, we have gutted the market for workers and have made it easier for companies to essentially pay people very little and to destroy the quality of life for many. All the while CEOs are doing pretty well:
The United States has some of the highest income inequality in the world when it comes to CEO pay to average worker pay. The latest jobs report only highlights this trend more deeply. This also explains the growing anger that is being seen this political season. While the 2008 campaign was motivated by the vision of “hope and change” in the midst of a global economic collapse, this year the political season is being driven by anger and frustration. And a large part of this is that promises made in the last election season never came to fruition. Instead, the status quo remained. Banks were bailed out. Cronyism remains rampant. And the middle class got annihilated during this time. So what does it matter that the stock market is up if the only jobs available to many are either folding clothes at Old Navy or selling vodka shots to college students?
We have so many looming challenges with the low wage recovery. You have college students coming out with ridiculous amounts of debt yet are only able to find low wage jobs. The frustration is clearly visible on how people are choosing to vote. People realize that the current establishment is not there to help them. This is why we also have a massive retirement crisis where the new retirement model is work until you die. The idea of replacing pensions with cheaper 401k plans with tentacles into Wall Street has been an overall failure (not for Wall Street of course).
So the latest jobs report was a bust. It should have been labeled the “waiter and bartender” recovery. And how many of these jobs provide enough income to cover the cost of living, let alone allow people to save money for retirement. The low wage recovery keeps on moving forward.