The middle class is the great engine of the American economy, but today that engine is sputtering. Our economic crisis is one half of a vicious cycle in which it and the unemployment crisis feed and perpetuate one another, hollowing out the middle-class in the process.
Middle-class wages are their lowest in 17 years. Too many workers are toiling in jobs that don’t pay enough to support families, and too many can’t find work at all. Meanwhile, the jobs that will grow the most in the next decade are expected to be low-wage and stripped of benefits. What passes as America’s economic “recovery” is awash in low-wage jobs.
The United States lost about 8.1 million jobs after the recession began in late 2007. The economy has since recovered about 3.3 million of those jobs, starting in early 2010. That, in itself, should alarm policymakers. The labor market is still in a deep, deep hole.
But in some respects, the situation is even bleaker than that. The types of jobs that have come back so far don’t seem to be paying as well as those that were lost.
A new report (pdf) from the National Employment Law Project finds that low-wage jobs, paying $13.83 per hour or less, have dominated the recovery to date. In many cases, they appear to be replacing higher-paying jobs that were lost in the first place.
The NELP report finds that mid-wage jobs, paying between $13.83 and $21.13 per hour, made up about 60 percent of the jobs lost during the recession. But those mid-wage jobs have made up just 27 percent of the jobs gained during the recovery to date. By contrast, low-paying jobs have constituted roughly 58 percent of the jobs gained since 2010:
And the people working in those jobs are older and more educated than ever.
It may have been a profitable business practice at Bain Capital, but stocking shelves at Staples is not a path to middle class existence. Instead, the loss of “good jobs” with decent wages and benefits — the kind of jobs helped build America’s middle class — led to a lost decade for the middle class, caused by conservatives policies. As a result, more Americans are working harder for less income, and can’t get ahead.
Our economic crisis is half of a vicious cycle in which it feeds off our unemployment crisis, and vice versa. Structural unemployment has nothing to do with it. Growing inequality has been accompanied by increasing middle-class insecurity. Middle-class families, the real jobs creators have much less to spend. Their insecurity is the real “uncertainty” that’s holding back economic growth.
Republicans claim the rich are job creators. Nothing could be further from the truth. In order to create jobs, businesses need customers. But the rich spend only a small fraction of what they earn. They park most of it wherever around the world they can get the highest return.
The real job creators are the vast middle class, whose spending drives the economy and creates jobs.
But as the middle class’s share of total income continues to drop, it cannot spend as much as before. Nor can most Americans borrow as they did before the crash of 2008 — borrowing that temporarily masked their declining purchasing power.
As a result, businesses are reluctant to hire. This is the main reason why the recovery has been so anemic.
We’re on an unsustainable course and it’s time for U-turn.
Offering a way forward, more than a dozen leading national organizations that research the economy, advocate for good jobs and represent workers have come together to propose 10 steps to build the middle-class. The guiding principles of the roadmap are values we all share: that work lies at the center of a robust and sustainable economy; that all work has dignity; and that through work, all of us should be able to support our families, educate our children and enjoy our retirements.
After the dust settles from the election, this new guide is something every lawmaker should take seriously as we continue to rebuild the economy. Here’s a quick overview of the 10 steps:
- MAKE EVERY JOB A GOOD JOB.
- FIX THE MINIMUM WAGE.
- SAVE GOOD PUBLIC AND PRIVATE JOBS.
- ENSURE HEALTH AND RETIREMENT SECURITY.
- UPHOLD THE FREEDOM TO JOIN A UNION.
- MAKE THE MODERN WORKPLACE PRO-FAMILY.
- STOP WAGE THEFT.
- REQUIRE THAT YOUR BOSS BE YOUR EMPLOYER.
- GIVE UNEMPLOYED JOB-SEEKERS A REAL, FRESH START.
- TOUGHEN LAWS PROTECTING WORKER SAFETY AND HEALTH.
Some might think the jobs being created in today’s economy are being shaped by some kind of invisible hand – that there is little we can do to change that. But a strong middle class doesn’t happen by accident.
Rebuilding the great American middle class in the 21st century will once again require deliberate action by the American people, through our government and by businesses that understand that our mutual long-term prosperity depends on treating workers everywhere with dignity and giving them the means to a decent standard of living. It will mean taking a U-turn from the policies of the past 30 years, which have squeezed workers in the pursuit of short-term profits, slowly hollowing out the middle class on which our long-term prosperity is built.
Together, we can set a course that will honor work, help rebuild the middle class and drive us forward to a more powerful, sustainable economy.
Read more here. We need good jobs for America now.