Most Americans realize that having a job is a prerequisite to gaining entrance into the middle class. If you work hard enough, chances are you would have access to some of the things promised to the middle class; access to affordable housing, a good education, and the ability for some sort of retirement. That ideal has been thrown out the window over the last few decades while the expansion of banking has created a cycle of boom and bust bubbles. The American labor force has been weakened from every angle while banking profits have soared beyond the rate of inflation (or any other measure for that matter). In fact, over the past decade average Americans are doing much worse adjusted for inflation. The defined contribution plan or pensions has given way to 401k/403b plans that push people into gambling on the casino known as Wall Street. Job protection is weaker than we have seen since the end of the Great Depression. Yet we are told that the economy is good without a solid job market?
If you want to put this into perspective take a look at this chart:
Source: Minneapolis Fed
This is as bad of a recession as we have had in our generation. The employment market has been broken down piece by piece. If you think of the 1990s and the technology boom, the employment market seemed to be bustling and growing at a rapid pace. That is, until companies realized they could offshore jobs and pay overseas workers one-fifth or less for the same kind of work. Then the decade of 2000 came along and everyone was making money gambling in the housing market. The unemployment rate fell to record lows as everyone that wanted a job pretty much had access to one (even though wages were stagnant debt masked this major problem). When that bubble burst, typical American workers were thrown under the bus for the sacrifice of the banking sector once again. Ultimately that is the problem. From the start of the recession back in late 2007 the entire focus has been on protecting banks and keeping home prices inflated to keep banks propped up. Home prices fell while bigger banks consolidated power and became more powerful. What should have occurred was a focus on creating jobs to ensure a vibrant middle class in the U.S. That question never appeared anywhere for policy discussion.
Here is another perspective on how bad the job market is:
With the latest jobs report we realize that employment growth is weak to non-existent in many sectors. The jobs that do come back are lower paying jobs in many cases. A recent article talks about the difficulty of employers to hire people back at lower wages:
“(Slate) What gives? Employers these days seem taken aback when highly qualified, experienced people fail to rush to apply for the openings they post. The article supplies several possible explanations: For jobs that require specialized skills, there simply might not be enough qualified applicants; employees accustomed to working at higher-paying office jobs aren’t eager to take lower-paying jobs at truck stops and restaurants; some of the unemployed might prefer collecting a few hundred dollars per week in unemployment benefits, while they last, to working a job that pays $8 per hour.”
Though I agree with some aspects of the article, what they fail to focus on is lower level financial positions and construction work for example has been decimated in this massive housing bubble. These jobs are not coming back. Did many of those tech jobs ever come back after the tech boom and bust? Of course not. Many of these jobs won’t be coming back, at least anytime soon, because we have built way too many homes and have inventory for years to come. So to expect that these better paying finance jobs (i.e., mortgage broker, personal banker, real estate agent, financial analyst) or construction jobs to come back might be premature. The article goes on to focus on why some of the lower paying jobs sit empty:
“In theory, given the high level of unemployment, huge numbers of enthusiastic, qualified workers should be flocking to all the openings that are available, even if the wages aren’t fantastic. In this kind of climate, you should accept the offer you get and be happy with it. And for many jobs, that might make sense. Going from making $80,000 after being downsized from a local law firm to making $70,000 at one in the neighboring office building might be a bummer but would be manageable. Taking a 15 percent pay cut to stay on at the restaurant that just went bust might make sense. But the labor market isn’t a perfectly efficient one. Most companies, especially small ones, hire from local labor pools. And if you’re in an area where the population is stagnant, declining, or aging, the numbers may be working against you. If jobs require people to commute a great distance or to move themselves to another state, or to another hemisphere, employers may find they need to sweeten their offers.”
This is not realistic thinking. The median household income in the U.S is $52,000 and has gone down further in this recession. To think there will be $70,000 jobs that are plentiful in this market is not going to happen. Unless you work on Wall Street, try going out there and demanding a higher wage and see what happens. The fact of the matter remains that 4 out of 10 Americans work in low paying service sector jobs and this sector is growing. The article basically confirms the continuing erosion of the middle class. For manufacturing jobs, this has been going on since the 1970s:
We have grown by leaps and bounds with population but the actual number of nominal workers in manufacturing has fallen by half since the 1970s. These were good paying jobs that provided access to the middle class. The banking propaganda would lead you to believe that as long as you work in the service sector and give your money to some Wall Street broker that after 30 years, you too will have a little nest egg stashed away. How has that turned out with the current casino? Jobs in construction have also tanked in this recession:
You’ll notice after every recession above, construction jobs jump back in a v-shape when the recession ends. We are nowhere close to that and given the glut of commercial real estate and residential real estate, it is likely to remain depressed for years to come. Banks will continue to raid the taxpayer’s wallet and make sure they get their keep even though they are largely the most responsible party in this economic calamity. When the propaganda hits from investment banks, just look at the facts and where the jobs are (or in this case, where they don’t exist).