The Real News on Jobs

trickle downAre we making progress on the jobs front? The Bureau of Labor Statistics reports 192,000 new jobs in February (220,000 new jobs in the private sector and a drop in government employment), and a drop in the overall unemployment rate from 9 to 8.9 percent.

We’re heading in the right direction but far too slowly to make a real dent in unemployment. To get the unemployment rate down to 6 percent by 2014 we’d need over 300,000 new jobs a month, every month, between now and then.

Overall, the number of unemployed Americans – 13.7 million – is about the same as it was last month. The number working part time who’d rather be working full time – 8.3 million – is also about the same.

But to get to the most important trend you have to dig under the job numbers and look at what kind of new jobs are being created. That’s where the big problem lies.

The National Employment Law Project did just that. Its new data brief shows that most of the new jobs created since February 2010 (about 1.26 million) pay significantly lower wages than the jobs lost (8.4 million) between January 2008 and February 2010.

While the biggest losses were higher-wage jobs paying an average of $19.05 to $31.40 an hour, the biggest gains have been lower-wage jobs paying an average of $9.03 to $12.91 an hour.

In other words, the big news isn’t jobs. It’s wages.

For several years now, conservative economists have blamed high unemployment on the purported fact that many Americans have priced themselves out of the global/high-tech jobs market.

So if we want more jobs, they say, we’ll need to take pay and benefit cuts.

And that’s exactly what Americans have been doing.

Employers have demanded wage and benefit concessions from their unionized workers and often got them. Detroit is creating auto jobs again — but new hires are getting about half the pay that auto workers were getting before. Airline workers are taking home 30 to 50 percent less than they did years ago. And so on.

Conservatives say it’s not enough. That’s why unions have to be busted – and why some governors are seeking to abolish laws requiring workers to become dues-paying union members in order to get certain jobs. Hence, the fights brewing in the Midwest.

Meanwhile, millions of non-union workers have accepted cuts in pay and benefits just to keep their jobs. Health benefits have been slashed, pension contributions from employers dramatically cut, wages dropped or “frozen.”

Millions of private-sector workers have been fired and then re-hired as contract workers to do almost exactly what they were doing before, but without any benefits or job security.

The current attack on public-sector workers should be seen in this light. The charge is they now take home more generous pay and benefit packages than private-sector workers. It’s not true on the wage side if you control for level of education, but it wasn’t even true on the benefits side until private-sector benefits fell off a cliff. Meanwhile, across America, public-sector workers have been “furloughed,” which is a nice word for not collecting any pay for weeks at a time.

Robert ReichAt this rate, the unemployment rate will continue to decline. But so will the pay and benefits of most Americans.

Conservative economists have it wrong. The underlying problem isn’t that so many Americans have priced themselves out of the global/high-tech labor market. It’s that they’re getting a smaller and smaller share of the pie.

Robert Reich

Robert Reich’s Blog


  1. pigdog67 says

    Robert overall a good assessment. The capitalists have done a great job in designing a system that makes workers disposable by developing labor pools all over the world. Ironically part of this goal was attained by encouraging ‘diversity’ and ‘public education’. And the opening up of China. This strategy is quite brilliant as the taxpayers pay for the public education (mainly the wage earners), not the capitalists. Unfortunately Capitalism is a highly unstable system particularly when the material and labor feedstocks are not sufficient to support 3% real growth year over year. So another crisis of Capitalism is pending, even though we are still recovering from the last one. There is some concern that Capitalism is actually dying among some intellectuals (sociologists and anthropologists). Lets see what happens in the next year (likely a crisis). Will capitalism get bailed out again? The future does not look good… Will we have Post Capitalism? What will that consist of? Both Capitalism and Communism will have died…

  2. Elaine says

    Here you go again. Spread the Wealth. Accept Government Socialist Obamacare with death panels and like it. Give everything you own including your soul to the Top Dogs, Fat Cat Union Leaders and be happy. Oh, and be sure to tell on your neighbor if they are not doing the same thing like good little commies should.
    Robert Reich move somewhere else but get out of the United States of America, the land of the free, home of the brave. Anyone that does not like living in a Republic, that has a Constitution, Bill of Rights and the Declaration of Independence, and no respect for the Founding Fathers or the people that do should not be living here. I do not know where you should go but find a place that meets your standards and stop trying to change Americans to your way of life.

    • Don Duitz says

      GET REAL! Bashing the commies and socialists is so 1950ish. Going back to the boorishness of the 18th century is not going to make this country greater. In fact, it will diminish our standing as a leader in the world.

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