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A New Study Shows Jobs Are Coming Back, But There’s One Major Downside
With the recession still very much visible in our rearview mirrors, we cling to any sign that the economy’s going to get better and we can return to a state of security and comfort. Jobs reports are one thing that we look to in hopes that things are finally starting to take a turn for the better, and so far, they’ve been fairly positive. In a recent article in the Chicago Tribune, though, one piece of news put a bit of a damper on it. Although jobs are returning, it’s the type of jobs returning that doesn’t bring the best news with it.

Jobs Return With Income Inequality


The Great Recession took away millions and millions of jobs, leaving the American economy severely battered and bruised. The effects of the recession were so deep, many of us wondered if there’d ever be light at the end of the tunnel. The short answer is yes, things will get better — and they are — but how you measure “getting better” makes all the difference in the world.

For instance, we’ve gotten back the 8.7 million jobs that we lost in the recession, which, on the surface, seems like great news. We’ve undone the effects of the recession, right?

Not so fast.

If these 8.7 million jobs aren’t the same ones as before, or even fairly similar, then we may be in a bit of a predicament. It’s not so bad if the new jobs are middle- and upper-class jobs, but what if we’re saddled with 8.7 million new McJobs? Is that a better scenario? There’s a good portion of the population who lost their jobs because of the recession and were highly educated and skilled workers, and now their market has dried up a bit. Suddenly, these workers with higher education degrees and years of experience don’t have access to the jobs they worked at before, and have to go back in time to work at jobs that don’t need their skills.

We can also look at it from a purely numbers point of view in terms of how many dollars are lost. Pre-recession, the average wage of the typical job that was going to be soon lost was $61,637. But when the jobs returned, the average wage was almost a third lower at $47,171. That’s a huge difference, as it adds up to things those workers could have elsewhere put their money toward, like a new car, part of a down payment on a house, paying off loans, or investing for retirement.

And when compared to the last recession we went to in 2002-2003, the percentage of lost wages is even more startling. Previously, the gap was just a 12% drop, but it’s almost doubled this time to 23%.

A big reason for this is the kind of jobs that have disappeared and what they were replaced with. Before, we had a decent concentration of manufacturing and construction jobs, both of which paid fairly high wages. In their place have come millions of jobs in hospitality, healthcare and administrative support, all of which pay much lower wages.

The Rich Keep Getting Richer


The study used in the Chicago Tribune article look at average pay versus median pay, with the latter meaning the salary that’s smack dab in the middle (as opposed to adding up all the salaries and dividing it by the number of salaries).

Why does this make a difference?

Take the median salary, firstly. If that number keeps getting higher, then it means the floor is moving closer to the ceiling, which generally indicates wages all over are rising fairly equally. But if the average salary is rising faster than the median salary, then it shows that the higher wages tend to be concentrated in a smaller group of earners — the rich households.

From 2005 to 2012, average household incomes grew more than median household incomes at a ratio of 2.6, which was just a smidgen higher than metro Chicago’s ratio of 2.5. However, this marks yet another turn in favour of richer households, as the majority of income gains can be pinpointed to the top 5% of incomes.

We can even go back to 1975 to see this trend occurring. The article writes, “Since 1975, the increasing share of income earned by the highest quintile — the 20 percent of households with the highest incomes — rose from 43.6 percent in 1975 to 51.0 percent in 2012.” What this means is the rich continue to get richer, taking more of the money pie than ever before. In fact, the top 5% of earners saw their incomes rise by 22.3% in 2012, compared to just 16.5% in 1975.

While rich or conservative minds will argue that they worked hard for their incomes (and this is true, to an extent, but doesn’t have much to do with the overarching argument), it doesn’t change the fact that there’s an income gap from before the recession. And when there are the same number of jobs paying out fewer dollars, that means less money is going into the economy, weakening it overall.


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