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New jobs disproportionately low-pay or part-time

Associated Press
August 5, 2013
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The 162,000 jobs the economy added in July were a disappointment. The quality of the jobs was even worse.

A disproportionate number of the added jobs were part-time or low-paying — or both.

Part-time work accounted for more than 65 percent of the positions employers added in July. Low-paying retailers, restaurants and bars supplied more than half July's job gain.

"You're getting jobs added, but they might not be the best-quality job," says John Canally, an economist with LPL Financial in Boston.

So far this year, low-paying industries have provided 61 percent of the nation's job growth, even though these industries represent just 39 percent of overall U.S. jobs, according to Labor Department numbers analyzed by Moody's Analytics. Mid-paying industries have contributed just 22 percent of this year's job gain.

"The jobs that are being created are not generating much income," Steven Ricchiuto, chief economist at Mizuho Securities USA, wrote in a note to clients.

That's one reason Americans' pay hasn't kept up with even historically low inflation since the Great Recession ended in June 2009. Average hourly pay fell 2 cents in July, to $23.98 an hour.

Among those feeling the squeeze is Elizabeth Wilkinson, 28, of Houston. After losing a $39,000-a-year administrative job at Rice University in January, Wilkinson found work at an employment agency for $15 an hour. Yet she's had to supplement that job with part-time work as a waitress.

"This morning I put $1.35 worth of gas in my car because that is all the money that I had," Wilkinson said via email. "It's very difficult to survive on $30,000 (a year), and I am living paycheck to paycheck."

Part-time work has made up 77 percent of the job growth so far this year. The government defines part-time work as being less than 35 hours a week.

Analysts say some employers are offering part-time over full-time work to sidestep the new health care law's rule that they provide medical coverage for permanent workers. (The Obama administration has delayed that provision for a year.)

Weak economies overseas have also reduced demand for U.S. goods and, as a result, for better-paying U.S. jobs in manufacturing. Government spending cuts have taken a toll on some middle-class jobs, too.

Many employers have also discovered that they can use technology to do tasks more cheaply and efficiently than office workers used to do. And some have found that they can shift middle-class jobs to low-wage countries such as China.

By contrast, most lower-paying jobs — from waiters and hotel maids to store clerks, bartenders and home health care aides — can't be automated or shipped abroad.

"You're always going to have jobs in the retail sector," says Michael Evangelist, a policy analyst with the liberal National Employment Law Project, which advocates on behalf of low-wage workers.

Consider Mike Ulrich, 30, who earned a master's degree in public administration in May from the University of Colorado. Ulrich hasn't been able to find work that requires a college degree. Instead, he works at a hardware store in Spokane, Wash., earning the state's minimum wage: $9.19 an hour.

Not all July's new jobs were low-paying. Local schools hired more than 10,000 teachers and other employees. Financial firms added 15,000.

And Scott Anderson, chief economist at Bank of the West, thinks concerns about the surge in part-time work might be overblown. The government's figures on part-time jobs are highly volatile, Anderson notes. The big gain this year could quickly reverse, he says.

Yet for the most part, Daniel Alpert, managing partner of Westwood Capital, wrote in a report last month, "the only folks engaging in meaningful hiring are doing so because labor is cheap."

The low quality of the added jobs could help explain something that has puzzled economists: How has the U.S. economy managed to add an average of roughly 200,000 jobs a month this year even though it grew at a tepid annual rate below 2 percent in the first half of the year?

Some are proposing an answer: Perhaps a chronically slow-growth economy can't generate many good-paying jobs — but can produce lots of part-time or lower-wage retail and restaurant work.

Diane Swonk, chief economist at Mesirow Financial, recalls that the robust economic growth of the late '90s generated millions of middle-class jobs. And it pushed unemployment so low that short-staffed companies were forced to convert part-time jobs into full-time ones.

"Faster growth would fix things," Swonk says. "That's the magic fairy dust."

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  • Politics aside...
    The Affordable Care Act has affected my family and I in a negative way. I work a part-time night job as a college professor, and the university told me they had to cut the hours I was teaching in half because I would have been considered full-time and would have fell under the mandate. Whether your party affiliation is R or D, you have to admit that now this is the law of the land, businesses are going to make these decisions to stay afloat. So, a vacation that I was planning for the end of the year with our family that would have put money back into the economy now gets put off because we lack the discretionary income we would have had before this became law.
  • JEB Comments
    A little harsher than my retort would be to Jo Jo, but I don't think she understands what a socialist leader she and others have elected. The trouble with Socialism is that you'll eventually run out of other people's money too. I have a small business, and my government is killing me. With year to date sales at 775 K, my government has taken 127 K year to date in the form of Federal, Social Security, Medicare, State Tax, County Tax, Sales Tax, Use Tax, Federal Unemployment Tax, State Unemployment Tax, and Property Tax. I swear I spend my life going to work early and working late, trying to figure out how to pay my government that just hands the fruit of my labor to others. Something's got to give. One day, I may just walk, work under the table, and apply for hand outs. But nice points JEB - just a little harsh. Peace.
  • More to Come
    Wages are falling because free trade in goods and free movement of capital forces them down. It's called factor price equalization, and it will continue until wages in this country are equal, subject to transportation costs, with whatever country we're trading with that has the lowest wages. But this all to the good, in the long run. Just as it is good to allow ruthless competition to continually winnow out society's losers. The ultimate aim, just like that of a good basketball tournament, is to be left with one winner and a bunch of also-rans. Those who do not serve the winner have no purpose, and should only subsist, if at all, on charity.
  • Books Banned
    JO JO, I pay for my kids to go to school along with their text books. If something is incorrect in a text book, it needs to be pulled out of schools. Again, use your head, peaple pay for education, so it should be facts not opinions when it comes to history. Are you wanting to re-write history? Do you even have kids? Do you want them to be taught something that is not based on facts. WOW, I cannot believe you even brought that up. GO MITCH!!!!MAKE EDUCATION BE EDUCATIONAL!!!!What next Jo Jo?
  • Friends
    Friends...Rev. Wright, BillAyres, Tony Rezko, Saul Alinsky, etc. Due to the fact that you do not know your president and his goals, look at http://www.obamaspast.com then make an effort to convince me that you and your leader should be Americans or Europeans. This is the United States, land of the free, and land of opportunity. Some take advantage of opportunity to succeed, and some (JO JO) take advantage of those that do succeed. Again, JO man or woman, pay your own bills...it is the American way.
  • JEB is a REPUBLICAN JOey
    Go ahead and say it...who do you think all the bankrupt green companies contributed to? who does GE, GM unions, Ford, etc contribute too....Nobama? Are these all those repbulcans you are talking about JOey? Daniels is a financial genious that got our state finances in line...how is the democratic governor in Chicago and Michigan doing JOey. You must just watch CNN socialist network. Dumbocrats turn down good paying jobs like the natural gas pipeline because the dumbocratic constituency would rather sit on their butt, and have hard working Americans pay their way. Work for your own money and pay your own bills JOey. Then we can take the billions of dollars that we are giving other countries and help the disabled Americans and elderly that cannot work. I do not want to pay for your health insurance, as I have a family to support
  • Jeb
    I bet Jeb is a republican and only listens to Fox news. He must love Daniels and Bennett and their effort to ban books and change grades for their "friends". You know, "friends" are anyone who gives them money for their campaigns. So much more I could say....
    • Teachers
      Well the teacher should aspire to be the administrator...they make 200K plus bonuses. How do you feel about school administrators JO JO...should they send you some money for your bills?
    • Hours
      Matt is correct. The company that my wife works for did it. Everyone that was not management got their hours cut to a maximum of 27 per week so the company does not have to offer them health insurance. JOey thinks that people that own companies and employee people should not make any money. Owners of business should be in the "poor house" like Jo. Oh, then there would not be any jobs.
    • JO JO = Socialist
      What meaningful change JO JO? The only thing un-american is Nobama and his Socialist agenda. Working people paying more for lazy people? I have a neighbor that does not work, her nor her husband take care of their lawn, they are fat, school lunches paid for, school paid for, said that she is going to get pregnant as soon as Nobama is elected so she would NOT have to pay for it. This is YOU JO!!!! Change is those crony rebpublican business men paying your way while you sit on your butt and do nothing. What positive change are the republicans standing in the way of....gay marriage, no jobs, billions invested in green companies that have gone bankrupt, higher national debt, legal abortions through 9 months, amnesty for Mexicans that are breaking the bank in healthcare? JO JO...wake up! Think prior to speaking. If there was any hope that the DUMBOCRATS were offering, the great republicans would not be standing in the way. Work for what you want and need JO JO...that is the American way, or simply move to Europe.
    • Health Care Law
      There has to be a blame laid at the feet the the health care law due to the fact that it defined part time as less than 30 hours. Employers don't have to offer benefits at this level and many corporations have lowered workers hours to 29.5 hours a week. Lower income, but the same amount of output. Sooner or later something has to give.
      • Not all July's new jobs were low-paying...
        Also, teachers ARE low paying jobs, lol.
        • New American Workforce...
          Many firms are using contractors. I've seen this trend in the Indianapolis tech sector. Firms just want to hire contractors or part-timers these days, FTEs are just a cost they don't want. Unless you are a 22-22-22 (22 years old, who works 22 hours a day, getting paid 22K) or a Purple Squirrel (Purple Squirrels already have the job they want) its very hard to land a FTE position. Contractors or burger-flippers — that is the New American Workforce.
        • yeah Ben....
          ...any idiot could have predicted this since Repugnant reps are busy obstructing meaningful change while also helping their crony capitalist buddies screw the 'Merkan workers with low pay/ no benefits while making HUGE profits for themselves...why, the greed your Republicon friends display is almost un-American
          • No Surprise
            I could have written this article in early November when the nation elected to have a spike on part time jobs. You asked for it, you got it. How is that HOPE working for you?

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