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.
John Lawrence
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Hi John
Well, you’re right. There is nothing like a job, a real job. The time-honored technique of creating “breadwinner” jobs by the government to stimulate the economy has sadly been discarded. Those holding the purse strings in Congress have a positive dislike of Keynes, as Krugman has oft mentioned. What can you do? If it’s not ignorance, which much of it may be, then an unpleasant alternative is before you: just plain meanness. A little more difficult to fix.
I’m thrilled to see criticism of the Fed on these pages but keep something in mind; the Fed is the reason many jobs failed to keep “breadwinner” status. It’s easy to say that the diminishing labor movement is the cause but, when I was a kid, a dollar had real, tangible value.
The rise of “the working woman”, in the late 70s, was claimed to be a “victory” of, by, and for women but, in reality, it was a necessary consequence to a planned devaluation of the dollar (an unpopular war had to be funded).
Sound currency brings clarity to so many issues. When a government chooses to fight wars or redistribute wealth, it has to pay for those schemes. Government gets its money through taxes. When it engages in an intentional devaluation, it distorts the real costs of war and welfare—THAT is the greatest heist of them all.
I don’t believe the devaluation was intentional but it was known and it was inevitable.
What did anyone expect when Nixon sends Kissinger to woo the Saudis into backing our dollars with OPEC’s exports in 1973? So we’ve spent 4 decades printing money out of worthless scraps of paper and passing it out all over the world as fast as other nations could consume petroleum, and they give us real goods, resources and services in exchange.
The realist in me figures the current situation is not so much a decline as a reality check. That prosperity we had all those years wasn’t because we worked harder or the world loved us or our Hollywood movies. It was because we were like the dealer in Monopoly with a couple stacks of extra cash in the box. We used it to bury our enemies (the USSR disintegrated in large part due to Reagan colluding with the Arabs to keep crude oil prices low and devalue the Soviet’s sole source of export revenue) and we’ve done unsavory things to preserve it (the war in Iraq, continuing to vilify Iran and Venezuela who both threatened to break from OPEC)
However, realistically, if we could go back, would/should we do it again?
Of course.
I think it’s revealing that a certain segment of our representative body when debating stimulus programs maintains that the government can’t create “real” jobs, and yet when military or defense programs are the issue, somehow those jobs *are* “real” and eliminating them will irreparably damage the economy. And while it may be true that most of the federal “HES” type jobs are not at the level of jobs created by military and defense contracts, collectively they can indeed have the same or greater impact on the economy. In fact, for the same amount of federal spending on jobs, I’d wager the boost to the economy would be greater from the HES positions than from the military/defense positions.
I could see a day when the president has to hire more soldiers
in order to rebuild roads, freeways, bridges, old university
buildings, public schools, rotting sewers, city halls, statehouses,
and all other infrastructure funding failures engineered by
members of the TeaHouse of Representatives.
God bless the boys in uniform; at least fewer of them will be
killed or go off the rails if they’re employed at work that
contributes to the national life.
As always, congress is terribly worried that the sequester will hurt defense contractors. Many of these defense contractors are high priced mercenaries that cost way more than a squad of military. But military cannot do the jobs that these mercenaries do, because our military men are restricted to the Geneva Convention. These mercenaries will not even enter a country where they are not given complete immunity (licence to kill). The right wing of the right wing has got everyone worried about a non existent catastrophe vis a vis the national debt. When the Republicans are not ignoring the debt that is when they are working out the next war. Tax cuts for the corporations. Every stupid expense as long as it is for war. Rebuild tanks the military doesn’t want, add additional engines for the new fighter plane and god will strike you dead if you try to close a military base. I don’t think these Republicans give a rats ass for America, but they seem to care only for elections.
Then there’s the F-35, a plane that costs half a billion a copy and nobody seems to want. Yet we are building it anyway. The fighter manufactured by Lockheed Martin (who else?) is seven years behind schedule and 70 percent over initial cost estimates.
Parts of it are manufactured in 45 of the 50 states, so the program to continue funding it will probably be successful.
Nobody seems to want the first supersonic V/STOL fighter with enhanced maneuverability, stealth technology, highly efficient super cruise?
I don’t think that is an accurate assessment. The prospective purchasers are just apprehensive of the cost overruns, the tardiness of delivery, the reports of unexpected problems, etc.
Surprise, surprise. Not many weapons systems came down the line differently.
Two I often mention are undeniable successes when reading the history books, but during their early years saw huge critical backlash.
The F-14 Tomcat, despite brilliant performances in prototype live fire trials of its Phoenix missile system, was deployed with a dismal powerplant that for the first nearly decade of service life, saw a very restricted flight envelope and scores of airframes were lost killing dozens of aircrews- those who didn’t die often lost their wings for not following the absurd NATOPS operating instructions. When the entire fleet of Tomcats got new engines by 1983, it was a shining star.
If you recall the M-1 Abrams has been considered the definitive MBT of modern warfare and has proven so on the battlefield- however as the first production units were coming onto line and being tested by Army tank crews in the late 70’s it was almost cancelled a number of times for a plethora of serious, even fatal flaws- including throwing its tracks off at far lower than full speed and the well reported fact that its range in the desert was exactly two miles in between air filter cleanings from all the sand the turbine engine sucked up.
Anyway perhaps I’m not so jaded, having a stint in military aviation in the ’80s , but watching the films released of the F-35’s tests in the last couple of years reveal that it’s number one mission- not fighting wars but deterring their happening before the fact- is already on the way to victory. A supersonic V/STOL with a decent payload? We won’t even need to dispatch the super carriers to take care of business.
As they used to say about the Tomcat… “Anytime, Baby.”
(to clarify, your article is right on target. the jobs situation is a mess. The F-35’s issues are business as usual)
When I found out about 6 months ago that the F35s were over 400 million dollars each I was amazed that people were not out in streets protesting! What is with us? Are we just a “bunch of sheep”? As you mention these part time jobs, temp jobs etc give no one time to read the news and become activists The real underlying problem is the worship in the religion of materialism We have lost our values of helping others I have never heard on “House Hunters”……..”Well I guess we will take the less expensive house so we can help that poor family in our kid’s school” or give more to the food bank…..It is a sad commentary on a country which is supposed to have the values of compassion and love.
Thanks, Grace, for your comment. Because US GDP is 70% composed of consumer spending, the religion of materialism must go on for the economy not to go into recession. We would probably all be better off if we paid down our debts and consumed less, but then the corporations, the government and the Federal Reserve would all be apoplectic and would do everything they possibly could to get us to consume more. Else it would be the end of Western Civilization as we’ve known it. And we’d probably all be better off. It’s not only the worship of materialism but also the worship of GDP growth. And since all GDP growth is debt based, for the US to succeed economically more debt must be created both personal and governmental. The only institutions not increasing their debt loads are corporations like Apple that are sitting with huge surpluses on their balance sheets.