Experts warn: New jobs arising not nearly as good as old jobs

Uneven recovery: Growth greatest in lower-paying work

RUTH MANTELL; MarketWatchMarch 5, 2012 

WASHINGTON — Millions of workers are grappling with unemployment, underemployment and deteriorating jobs.

Marked by declining earnings and benefits, job quality has been eroding for years. And the future looks rough for many, experts say.

Jim Fertig lost his 40-hour-a-week accounting job in March and recently found part-time work as a telemarketer. “There is no responsibility. I just make the calls. It’s simply a script; it’s boring,” Fertig said.

The 65-year-old in Bedford, Ohio, also takes care of an adult son with multiple sclerosis. Fertig worked in health care accounting for 39 years and now generates leads to help colleges find students.

“Maybe jobs are coming back, but the ones that are in the middle are just being decreased,” Fertig said.

Meanwhile, Michelle, a 54-year-old living outside of Chicago, recently started a new job taking insurance claims. A former team leader of an information-technology help desk, she was laid off in late 2008 from a company where she had worked for 19 years.

Her new job is a step down from her prior work in pay and responsibility. She interacts with people but doesn’t analyze products as she did in her old job.

“It’s tedious and micromanaged. They want you to be smart, but if you use your brain you will probably get into trouble,” Michelle said. “It’s just pretty sad. In my old job I had more responsibility, varied responsibilities and a lot of input on how things were handled.”

U.S. employment is still down almost 6 million jobs since the Great Recession began, and industry growth has been uneven during the recovery.

A July report from the National Employment Law Project, a New York-based advocacy group, found that while employment losses during the recession were concentrated in midwage occupations, gains during the early part of the recovery were greatest in lower-wage occupations. During the early recovery, there was relatively large employment growth in lower-wage jobs such as retail salespeople and office clerks, compared with losses in higher-wage occupations such as police officers, first-line supervisors, and managers of construction trades and extraction workers.

With almost 13 million unemployed workers, competition is intense, and some workers with new jobs are taking cuts in pay and responsibilities. Henry Farber, an economist at Princeton University in New Jersey, studied employment in the Great Recession, and found that job losers who found new positions earned on average 17.5 percent less in the new job.

With persistent high unemployment, there’s downward pressure on wage growth.

“Employers know workers don’t have outside options. If your employer knows you don’t have outside options, it reduces your bargaining power,” said Heidi Shierholz, an economist at the Economic Policy Institute, a Washington think tank.

Despite national employment growth – private nonfarm employment has gained steadily since early 2010 – employees remain wary, and few are voluntarily leaving their jobs. The “quits rate,” which measures the number of quits as a percent of total employment, is about 1.5 percent – up from a low of about 1.1 percent in early 2010, but less than 2 percent when the recession began, according to U.S. Labor Department data.

“That’s one of the big red flags we see,” Shierholz said. “If we were really seeing job prospects picking up, we would see voluntary quits rising also. Quitting and getting a new job is one of the key ways that people see substantial wage growth.”

The economy is just starting its jobs recovery, and it will take years for the full effect of the current administration’s policies to manifest in the labor market in areas such as health care and infrastructure, said Lawrence Katz, an economist at Harvard University. While Republicans deride President Barack Obama’s record, the economy would be worse without federal stimulus, Katz contended.

“We probably have several million more jobs today than we would have had,” Katz said. “Given the direction that things were going, I think the administration’s policies played an important role in preventing something that looked like the Great Depression. No matter how bad things are now, it wasn’t as bad as it could have been.”

But longer-term trends point to a tough future, as employers want to maintain high productivity, and there’s pressure from technology and international markets.

David Autor, an economist at the Massachusetts Institute of Technology, has found a sharp polarization of the labor market over the past two decades. There have been “expanding job opportunities in both high-skill, high-wage occupations and low-skill, low-wage occupations, coupled with contracting opportunities in middle-wage, middle-skill white-collar and blue-collar jobs,” according to his research.

Good jobs are associated with good benefits, said Austin Nichols, an economist at the Urban Institute, a Washington-based think tank.

“There’s a widening gap between the haves and the have-nots,” Nichols said.


According to the U.S. Census Bureau, those covered by health insurance declined to 83 percent in 2009 from 86 percent in 1999. In that time period, those with employment-based coverage fell to 56 percent from 64 percent, while those with government insurance rose to 31 percent from 25 percent.

Education plays an important role in job quality. Real median usual weekly earnings rose 9 percent to $782 in 2010 from $720 in 1980 for full-time wage and salary workers at least 25 years old, according to government data. But college graduates saw a gain of 21 percent to $1,144. Meanwhile, there was a decline of 7 percent to $626 for high-school graduates, while those without a high-school diploma saw a loss of 21 percent to $444.

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