U.S. recovery leaning heavily on McJobs
The U.S. recovery is leaning heavily on McJobs. Lower-paid and temporary work accounted for most of May’s 175,000 employment increase and 850,000 of new jobs in the past year. And part-time work remains high and may rise as Obamacare kicks in. The jump in jobs might look good, but for many it’s not a path to prosperity.
New positions in leisure and hospitality, retailing and temporary work made up 97,000 of May’s increase and 40 percent of the 2.1 million jobs added to the economy since May 2012. Yet their overall share of the existing labor force is just 23 percent. Manufacturing, meanwhile, has added just 41,000 jobs over the past 12 months and actually lost 8,000 last month.
A job’s a job, but weekly earnings average only $525 and $351 in leisure and hospitality compared with $989 in manufacturing and $824 overall. The relatively high number of positions offering more meager pay explains the overall sluggish pace of wage increases, which have barely keep pace with even currently subdued inflation.
Meanwhile, the number of people relying on part-time work has not decreased as much as might be expected. Usually, the ratio increases during recessions – it peaked at 5.9 percent of the workforce in November 2009, for example. Last month, it was 4.7 percent, or 5.9 million. While an improvement, in percentage terms it’s around the same level as the peak of past recessions and is way above the 3 percent of 2007.
Worryingly, that may soon increase even if the economy continues to improve. That’s because President Barack Obama’s healthcare reforms, due to kick in next January, force employers to provide health insurance to employees working more than 30 hours a week. Some employers, especially in industries and companies with thin margins, may shift more of their workforce below that threshold. That’s likely to affect jobs that are already at the lower end of the wage spectrum.
That’s grim reading for blue-collar living standards. Workforce participation is near a 34-year low, even after increasing slightly in May. But for many in or looking for lower-paid jobs, it must often seem barely worth bothering.