The news that the U.S. economy added 280,000 jobs sounds great. Bloomberg offer charts that show a more mixed situation. Yes, job growth is up. However, the unemployment rate went up because more people have entered the job market. Similarly, average hourly earnings is up, but that measure has moved like a yo-yo over the past year. The best news is that long-term unemployment is moving steadily down. If you’re thinking about looking for a new job or asking your boss for a raise, this could be a good time to act. Even if the news is mixed, the job market is much better than it was five years ago.
Target has announced that it will pay its employees a minimum wage of $9 an hour. It’s easy to dismiss this move as being too little. Instead, I like to look at it as a small step that will have big consequences. Employer who pay less than $9 an hour now have to fear that they will lose employees to America’s two largest retailers. More importantly, wage increases at the bottom raise the bar for all workers. If the unemployment rate continues to drop, wages will have to go up. Hopefully, the decisions by Walmart and Target will be the first step that leads to higher pay across industries.
The job numbers from last month are exciting. The unemployment rate is down to 5.5%, which is good in itself. However, there is even better news. Bloomberg reports that leading retailers are struggling to keep their lowest paid employees. It will take a while for employers to move the needle up on salary, but this is a good start. Bloomberg depicts the current situation as a conflict of interests between investors and employees. I disagree. As lower paid workers make more money, they will spend, which means everybody wins. The article also demonstrates how much it costs a company to replace employees. The raises leading retail companies have given to their employees can be seen as a way to save costs related to turnover. The news is good. Let’s be happy for a little while.
While this month’s employment report again showed more jobs being created and a falling unemployment rate, wages dropped. According to past trends, wages should go up as labor becomes scarcer and companies want to retain productive employees. Former Labor Secretary Robert Reich analyzes this situation in a recent blog post. Reich points to factors that can hold wages down even as unemployment shrinks. Two main culprits are the global economy and automation. Companies can offshore cheaper labor, and they can find new ways to let technology replace humans. Reich scoffs at those who call these factors “efficiency.” Reich concludes by blaming both large corporations and Wall Street for holding down wages. I’d agree with him and add one more culprit: spineless politicians who serve Wall Street and large corporations. Nothing will change until our politicians and laws provide some protection for American workers. Or, to put it another way, nothing will change until American voters elected politicians who represent the interests of working people.
The business website 24/7 Wallstreet reports that retailers expect to make major increases in hiring for the Holiday season. That’s good news for people who will get jobs, but it can lead to happy media reports that mask deeper problems in the economy. Why? First, these jobs are not permanent and generally low paying. Second, the unemployment rate and related news will sound better than it really is. For my money, watch the manufacturing sector to understand how the job market is doing. More importantly, watch changes in wages and benefits. Until America gets a raise (at least 99% of America), we will not have significant changes in the economy or in real opportunities for working people.
In past years, I have cautioned readers to beware of statistics about the unemployment rate. The news media loves to tell negative, scary stores. Fear sells. At the same time, a tick up in the unemployment rate means nothing to individual job seekers. Think about it this way: You are not a statistic.
However, sometimes it is important to recognize a statistical trend, especially if it can help you advance your career and make more money. Job growth has been strong over the last three months, and part of that occurred during one of the worst winters in recent memory. If the rate of new hires considers to exceed 200,000 over the next few months and the unemployment rate dips below 6%, things could improve for working people.
Over the past few years, managers and employers have been able to take a “if you don’t like it, leave” attitude. They are cocky because they think almost any employee is easily replaceable. A tighter job market will make them less confident. Watch what’s going on in your company and industry. If employees start leaving for better jobs, it might be time for you to start looking for work or ask for a raise. Employers are also subject to fear. If they see the unemployment rate going down, they will start to appreciate workers more. Use that change in the economy to advance your career and, if necessary, look for a new place to work.
I was listening to the radio yesterday and heard a commentator moan: “There are seven people looking for every available job.” His point was that the economy is bad and getting worse. He wants the government to be more proactive in helping working people and middle class. I agree that the government can and should do more. However, we progressives and liberals should make that argument without using hyperbolic statistics.
As I’ve seen the statistics used, the 7:1 ratio refers to workers seeking jobs that pay more than $15 an hour. This is not good news, but it’s not all job seekers. That ratio is closer to 3:1. Again, not good, but not numbers that say: “There are no jobs.” The challenge for most workers in 2014, especially for young people, is finding a job that pays a living wage and provides some decent level of benefits.
For many workers, that challenge will not be available immediately. It will be necessary to take a bad job. The key is to keep the time in that job as short as possible. Anyone who has the skills, knowledge, and experience needs to keep the job search going until she finds the right kind of work. It will not be easy in this economy, but it is possible if the job search is followed in a patient, persistent manner. Don’t let the scary numbers send you into job search paralysis. Stay focused and don’t quit – that’s the goal for 2014.
Writing in Daily Kos, Laura Clawson examines the debate over extending unemployment benefits. What she finds is that there was no debate when George W. Bush was president. During a time when the unemployment rate was lower, the House approved 5 extensions, each of which was not paid for. Now House Republicans are insisting that the benefit which workers contributed to be paid for. Wouldn’t it be great if they asked for the same kind of responsibility from large corporations that pay no taxes and still receive government benefits? As Clawson points out, this policy also makes no sense because it takes buying power out of the economy. Of course, that is a common theme when it comes to how the GOP thinks about working people, as we have also seen in the debate over raising the minimum wage.
Do some poor people cheat through programs like unemployment and food stamps? Sure. So do upper income people cheat – legally – through tax dodges and estate planning. The problem is that poor people don’t fund the campaigns of the politicians who make the laws and tax policy. What poor and working class people can do is vote. Hopefully, they will remember and get to the polls.
Huffington Post republished an article from the New York Times that outlines the impact of austerity on the job market. Deficit-cutting mania has impacted the unemployment rate by as much as 1%. It has also hurt economic growth, which would generate even more jobs. Without taking sides, the article describes inaction by the Republican Party, which has contributed to the current state of the economy. For my part, I would also take the President to task for not doing a better job of communicating the problem to the American people. His willingness to compromise and look for a “Grand Bargain” has made a confusing situation worse. Bottom line: Government action – not deficit reduction – will generate jobs.
I began working as a career coach and resume writer in 2000. In that year, the nonemployment rate* for young Americans (age 25-34) was 18.5%. In the most recent measure, which marks the year 2011, that rate has moved up to 26.6%, which puts the U.S. ahead of France, Japan, Britain, and Germany, all of which had higher rates in 2000.
According to an article in Common Dreams, the news gets worse when we look behind the numbers. The age group 25-35 is the only group to have a lower average wage in 2013 than it had in 2000. Part of the reason for this change could be that 40% of new college graduates are working in jobs that do not require a degree. As I’ve written in previous posts,7 of 10 jobs created in the past few years have been low wage jobs that pay $30,000 or less. What can young people do when low wage jobs are the only option?
We need to do more than just talk about a monthly employment statistic (30+ months of meaningless job growth) and the unemployment rate. Yes, the economy has generated private sector jobs. However, many are part-time, low paid, or benefit free. We need to talk about what jobs pay. We need good jobs.
* This rate included unemployment and those who have given up looking.
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