A trend to working fewer hours and low wage labor: Is America looking at becoming a low wage nation in a race to the bottom? 1 out of 4 people working are in jobs paying $10 an hour or less.

One distinctive feature of this recovery is that many of the jobs added since the recession officially ended five years ago is that a large part of the jobs are coming from low wage labor. Low wages are not the only challenge hitting Americans. The small package of benefits, or lack thereof in many cases, is leaving Americans in a position where more of their disposable income is going to basic needs like healthcare and retirement planning. Pensions are virtually extinct in the current environment and companies are largely scaling back what benefits they give to new incoming workers. Younger workers have a tough time developing the skills required for the new positions in the market and are pushed into lower paying jobs. This lag in career development also stunts any potential for socking money away for retirement. That is why many younger Americans have nothing saved and in many cases are starting their working professional lives with a negative net worth based on student debt. If we look at the average working hours for an American worker we will find that we are still nestled in the depths of a generational trough. Why is that? Because of our growing army of part time workers.

A nation of part-time workers

The trend to working fewer hours per week is nothing new. In fact, we’ve been on a steady decline since the 1970s. A large part of this has to do with a growing number of people working in part-time roles in the low wage economy. As our middle class shrinks with typical 40 hour a week employment, we are seeing more contract and part-time labor that usually falls under the 40 hour level.

The recent recession pushed us into a new low even below the already lower level of the 1990s:

working hours

There is an unmistakable trend here. Why is that? First, we are adding as a ratio more lower paying jobs than higher paying jobs. Economist Tim Taylor has data highlighting that a very high portion of American workers are part of a low wage nation:

low-wage-2

In this case, low wage work is defined as people working in jobs that pay $10 an hour or less. Now run the numbers here. Putting in a solid 2,000 hours you would yield $20,000 a year which is below the poverty line for a family of three. And then you realize why out of the 47 million people on food stamps, many are actually part of the working poor.

There is something to be said here but it definitely flies in the face of what we are presented as a nation with a massive middle class that is thriving and actually growing. Or a political system that focuses on aiding the middle class. That is simply not the case. To the contrary, our once vibrant and strong middle class is being slowly squeezed out. Many once in the middle class segment of our economy are now being pushed off the wagon and into the lower income brackets.

I find it fascinating that a large part of auto sales are being boosted by subprime auto loans:

subprime

Since the housing market is now being dominated by big money investors, let us go out and purchase cars even though incomes and credit history push many into subprime debt. This is problematic for a variety of reasons but also shows a bad financial plan. A car depreciates once it goes off the lot. At least with buying a home at a reasonable price, you are building up equity over time. Yet with housing, the once cornerstone of the American Dream, it is now co-opted as a commodity and currently is being inflated by Wall Street and big money investors trying to find higher yields for their growing pools of cheap money. Money that can be borrowed from the Fed at near zero percent. Yet for these Americans going into subprime auto debt, they are paying a wicked premium on that interest.

Yet Americans continue to work less hours for less pay. Benefits are secondary in this current market and the media continues to paper over the actual decline of the middle class. Plus, with real inflation picking up purchasing power is going down the drain. The trend to low wage labor continues at full speed ahead.

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3 Comments on this post

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  1. AC said:

    Stop pretending there was a ‘recovery’.

    July 22nd, 2014 at 7:47 pm
  2. Ame said:

    NAFTA and GATT are to blame for much of this. http://rense.com/general76/cclle.htm

    “Isolationist” was a dirty word in the 1990’s when Ross Perot ran for President.
    But he warned that the “sucking sound” Americans would hear would be their jobs leaving the country.

    He-Was-Right

    July 23rd, 2014 at 5:19 pm
  3. arno said:

    There may have been a recovery, but only if you believe in corrupt statistics. I can agree that people are working fewer hours in most cases because of the so called Obamacare, where employers are cutting back on full time hours to try to weasel under the terms of the “law”. In other cases, some employers have been given a one year delay in implementation of the “Act”. In those cases, and I can cite one example by personal knowledge, I know that in this particular case, this worker is working 12 hours per day, 6 days a week. Why ? Because this worker’s employer was given that one year exemption until 2015. After that, whether this workers hours continue like this are doubtful.

    July 29th, 2014 at 7:23 am

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