Low wage recovery highlighted by 7 out of 10 jobs added in January coming from minimum wage waiters and temporary retail workers.

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:

where the jobs were_0

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:

ceo-worker-pay-ratio1

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.

RSSIf you enjoyed this post click here to subscribe to a complete feed and stay up to date with today’s challenging market!     

TAGS: , ,




1 Comments on this post

Trackbacks

  1. Rachel said:

    A lot of people fail to remember or they possibly don’t understand that there still is a large number of Americans do not have a two year degree, let alone a BS or PhD. While there certainly are educated low wage workers, the vast majority of Americans find themselves here due to a lack of available jobs and their lack of an education among other things. These are most certainly not the days of old where one could go work at a factory with a high school education and still be reasonably comfortable financially.

    February 8th, 2016 at 1:00 pm

LEAVE A COMMENT

Subscribe Form

Subscribe to Blog


Enter your email address to receive updates from My Budget 360:

100% Private & Spam Free.


Popular – All Time

  • 1. How much does the Average American Make? Breaking Down the U.S. Household Income Numbers.

  • 2. Top 1 Percent Control 42 Percent of Financial Wealth in the U.S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth.

  • 3. Is college worth the money and debt? The cost of college has increased by 11x since 1980 while inflation overall has increased by 3x. Diluting education with for-profits. and saddling millions with debt.

  • 4. The Perfect $46,000 Budget: Learning to Live in California for Under $50,000.

  • 5. Family Budget: How to go Broke on $100,000 a year. Why the Middle Class has a hard time Living in Expensive Urban Areas.

  • 6. Lining up at Midnight at Wal-Mart to buy Food is part of the new Recovery. Banks offering Mattress Interest Rates. The Invisible Recovery Outside of Wall Street.

  • 7. You Cannot Afford a $350,000 Home with a $75,000 Household Income!

  • 8. Crisis of generations – younger Americans moving back home in large numbers. Student loan default rates surging largely due to for-profit college expansion.

  • 9. The next massive debt bubble to crush the economy – 10 charts examining the upcoming implosion of the student loan market. $1 trillion in student loans and defaults sharply increasing.

  • 10. Welcome to the new model of retirement. No retirement. In 1983 over 60 percent of American workers had some kind of defined-benefit plan. Today less than 20 percent have access to a plan and the majority of retired Americans largely rely on Social Security as their de facto retirement plan.
  • Categories



    wordpress stats