U.S. Wages Stuck in a Rut
The U.S. economy’s recovery from the recession that began in December 2007 has been slow and painful. As of February 2013, there were 3.2 million fewer jobs in the U.S. than there were when the recession began in December 2007. While job growth, or lack of it, receives a great deal of attention and media coverage, there has been an increasing focus on the lack of growth in wages. In other words, observers of the U.S. economy increasingly express concern about the quality of jobs, rather than just the quantity of jobs.
Five years after the 2001 recession began, the number of jobs was 2 percent above its prior peak, but real wages were 8 percent above their prior peak. In contrast, five years after the 2007 recession began, both jobs and real wages are 2 percent below their prior peaks. This comparison of the two recoveries suggests that the jobs that are being created in the United States in the last few years are lower-wage jobs. While mid-wage jobs were lost by the millions during the recession and its aftermath, the jobs that have replaced them are predominantly low-wage. Globalization and automation are exerting pressure on traditionally middle-class jobs like manufacturing and clerical work. In addition, a higher percentage of the workforce now works part-time. Sarah Raskin, a member of the Federal Reserve’s Board of Governors, recently warned that the disproportionate number of low-wage jobs created during the recovery could eventually threaten prosperity in the U.S.