Only part time, temp and minimum wage jobs are being created
By John Lawrence
“Four years after the [Great Recession of 2008] median family income has fallen by 10 percent in real terms. …[T]he number of full-time breadwinner jobs in the US economy is still down by 5 million; that is, it is more than 8 percent below its late 2007 level. In short, the Main Street economy has been failing for years, and now the massive debt deflation [the paying down of debt rather than consuming] under way will aggravate that condition enormously [since GDP is 70% consumption], leaving millions of citizens to depend on intermittent employment in low-paying part-time jobs or to fall back on family, friends, charity, or nothing at all.” – David Stockman, The Great Deformation.
A breadwinner job is a job that is sufficient to support a family, including rent or mortgage, car payment, adequate food and nutrition, health care, education and savings for retirement. That meant a job paying $50,000 a year in 2007 when the US economy peaked. At that time there were 71.8 million “breadwinner” jobs in construction, manufacturing, white-collar professions, government and the like. These jobs accounted for more than half of the nation’s 138 million total payroll.
Breadwinner jobs are the foundation of the Main Street economy. But after losing 5.6 million of these jobs during the Great Recession, less than 4 percent of these jobs have been recovered. The 3 million jobs recovered since the recession ended in 2009 have been mainly in part-time work, temp jobs and in health, education and social services (the HES complex).
More than half of the recovery (1.6 million jobs) occurred in the part-time economy which presently includes 36.4 million jobs in retail, hotels, restaurants, shoe-shine stands, barista kiosks and temporary help agencies where the average annualized compensation was only $19,000. The balance consisting of 1.1 million jobs was in the HES complex which consists of 30.7 million jobs in health, education and social services. Average compensation in these jobs was about $35,000. annually. These jobs are almost entirely dependent on government spending and as such are subject to being eliminated at the whims of a deficit cutting Congress. That leaves only approximately 300,000 breadwinner jobs created since the Great Recession!
A family would need two of the HES type jobs to be the equivalent of one breadwinner job or three temp or part time jobs to be the equivalent. Simply put this is why both the husband and the wife need to be out in the workforce, whereas a generation ago only one member of the household needed to be in the workforce with the other member (usually the wife) staying home raising the children and taking care of the house. This is what women’s liberation has wrought! Two members of the household in the workforce and nobody taking care of the children.
According to a report in ProPublica, roughly 2.7 million temp workers are currently employed in the US — a sector that’s roaring back 10 times faster than private-sector employment as a whole. Many temp workers start work with the promise of a full time job after a 3 month or 6 month probationary period – only to find their times extended to the point where they can be at the same worksite for years, but as an employee of the temp agency with no benefits, vacation or raises. More and more companies are turning to temp labor to avoid the insurance costs and other obligations of a full-time staff. Even nurses, cooks and professors are being hired as temp workers.
Temp workers have few rights. Complaints to management are frequently referred to the temp agency itself and are not subject to being considered at the company where the temp worker has actually been working. They are not day laborers looking for an odd job from a passing contractor. They are regular employees of temp agencies working in the supply chain of many of America’s largest companies – Walmart, Macy’s, Nike, Frito-Lay. They make our frozen pizzas, sort the recycling from our trash, cut our vegetables and clean our imported fish. They unload clothing and toys made overseas and pack them to fill our store shelves. They are as important to the global economy as shipping containers and Asian garment workers.
Many get by on minimum wage, renting rooms in rundown houses, eating dinners of beans and potatoes, and surviving on food banks and taxpayer-funded health care. They almost never get benefits and have little opportunity for advancement.
Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call “temp towns.” They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.
In June, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in mid-2009 has been in the temp sector, federal data shows. But according to the American Staffing Association, the temp industry’s trade group, the pool is even larger: Every year, a tenth of all U.S. workers finds a job at a temp agency.
A healthy Main Street economy depends upon growth in breadwinner type jobs, but there has been none. The Bureau of Labor statistics (BLS) reported 71.8 million breadwinner jobs in January 2000, but 7 years later in 2007,after the huge boom in the housing, real estate, household consumption and stock market sectors, there were still exactly only 71.8 million jobs of this type.
To be sure, the economy did grow during this period. Nominal GDP grew by 40% or about $4 trillion. However, outstanding debt grew by $20 trillion during this same period. So the economy was being pushed along by a torrent of debt far exceeding any real economic growth due to rising productivity and earned income. This debt tsunami which induced only modest GDP growth makes it clear that the Fed policy of increasing debt in order to “grow the economy” is a total failure. As people pay down their debt (debt deflation) instead of buying more stuff, GDP growth will suffer. GDP growth in the real economy is much more modest than reported GDP because 8% of GDP (in 2010) was contributed by financial services, primarily Wall Street speculation and hedge fund activities which often tear down the real economy for the benefit of speculators. Case in point: Twinkies are back on store shelves after being taken over by a hedge fund and unionized workers being laid off. See: “Twinkies’ Twisted Tale: Junk Food Devoured by Junk Bonds“
While the Federal Reserve has pumped cash into the big Wall Street banks and the upper one percent of wealthy investors, very little of this money has trickled down to Main Street. One of the Fed’s missions is to increase employment. However, the American economy has been almost entirely bereft of job growth. For the entire 12 year period since early 2000, it has generated a net gain of only 18,000 jobs per month, a figure that is just one eighth of the labor force growth rate. The only thing happening on the “jobs creation” front in the last 10 years in addition to the massive creation of temp and part time jobs is a huge creation of the bedpan and diploma mill brigade which consists of employment in nursing homes, hospitals, home health agencies, and for-profit colleges.
The sunny job creation statistics cited by the Fed and by anxious politicians eager for good sounding economic news are a complete sham. The fact is that monetary policy in the US is all about fueling the speculative urges of Wall Street, not about the economic health of Main Street. This obfuscation is especially true with respect to the oft cited figure of the creation of 3 million jobs since the recession ended. What they don’t tell you is that the majority of these jobs were part-time jobs in bars, restaurants, retail emporiums and temporary employment agencies which supply most of the factory and warehouse jobs for the likes of Microsoft, Amazon and Wal-Mart.
The recovery, such as it is, has been fueled by the massive creation of debt in the hopes that consumers will be persuaded to borrow and spend since 70 percent of US GDP is comprised of consumer spending. If instead consumers choose to pay down personal debt (debt deflation) which is the smart thing to do, the American economy will go into recession. The Federal Reserve is trying to levitate the economy by gigantic infusions of free money into the Wall Street casino in the hopes of creating another real estate bubble or a bubble of any sort really. Please give us a bubble. Any bubble! The only economic activity that Fed chief Bernanke is producing with his helicopter free money drops is speculation on Wall Street. The inflation of speculative bubbles will only lead to another bubble pricking collapse since the smart fellows at the Fed and in the government did not learn anything from the economic collapse of 2008.
The American people should not stand for another too-big-to-fail government bail-out of Wall Street. The next time that happens there may be a revolution to go along with it. People are getting tired of the fondling of Wall Street while the people get gypped. In particular they have been gypped lately with the huge accumulation of student loan debt and the refusal to write down any homeowner mortgages while foreclosing mightily instead. What we need is not catering to the Wall Street speculative economy of the 1%, but consideration for the Main Street economy of the 99%. A recent San Diego Free Press Article about an unconditional basic income for the masses would be an antidote to the massive giveaways of free money to Wall Street.