WASHINGTON, DC—There has been much satisfaction in the steady increase in the US employment rate. In July the US economy added 209,000 jobs, continuing a trend that has been building for many months.
This is not to say there is no reason for concern; long-term unemployment remains a seemingly intractable problem and underemployment seems to be particularly high in a number of states. The national underemployment average is 13.4% but in such states as Nevada and California it is 17.4% and 16.7%, respectively, according to an analysis by 24/7 Wall Street.
A new report by the United States Conference of Mayors now points out another weakness in the job creation story: the jobs that have come back are paying 23% less than the ones lost in the recession.
The average annual wage of $43,950 in the sectors that lost jobs during the 2000–03 period would not be matched by the average wage of $38,839 in those sectors adding jobs through 2006, the report found.
These losses were concentrated in the construction and manufacturing sectors, where most of the jobs were lost. According to the report, jobs that were lost in high-wage manufacturing (where salaries averaged about $63,000) and construction ($58,000) sectors were replaced by jobs in the lower wage sectors of hospitality (where a salary could clock in at $21,000), health care ($47,000), and administrative support ($37,000).
There are a number of conclusions that can be drawn from the report; one, of course, is that it is yet another data point to illustrate the growing income inequality in the US, which has ramifications for all segments of the economy from retail to housing. It is also plausible that the Federal Reserve may take such figures into account as it decides when and by how much to start raising interest rates.
Also there is this to consider: lower incomes usually translate into lower rates of inflation.