Study: “Good jobs” in America on the decline

The share of “good jobs” in the U.S. economy declined from 27.4 percent to 24.6 percent since 1979, a new report by two labor economists says.  The drop would have been much larger if the workforce had not become vastly better educated, their study shows.

The report, by John Schmitt and Janelle Jones of the Center for Economic Policy and Research, defines “good jobs” as those where the worker earns at least the median wage – around $38,000 yearly – uses employer-provided health insurance and has some sort of retirement fund, either a traditional pension or a 401(k) account.

Schmitt and Jones admit they may understate the decline in good jobs.  For example, they point out that the only measure they have of health insurance coverage is whether employers provide coverage and pick up part or all of the tab for premiums and co-pays.  The percentage of employers providing coverage has been declining.

But the report does not – because the data are unavailable – measure the quality of health care coverage and how much of the tab the worker must pay.  And the report does not measure if the pensions are protected, or adequate to pay for retirement.

Still, the report backs unions’ frequent contentions that good jobs have been declining, leading to the decline of the middle class.  The authors point out that even while more than one-third of workers have college degrees, even those workers have been losing good jobs, just in lesser numbers than lesser-educated workers.

Schmitt and Jones concluded that since the workforce has become seven years older over the last 33 years, much more well-educated and since its productivity increased 63 percent per worker over the period, there are other reasons for the drop in good jobs.  One is the drop in worker power due to the decline of private sector unionization.

“Our estimates, which control for increases in age and education of the population, suggest that relative to 1979 the economy has lost about one-third (28%-38%) of its capacity to generate good jobs,” the two wrote.

“The standard explanation for the deterioration in the economy’s ability to create good jobs is most workers’ skills have not kept up with the rapid pace of technological change.  But, if technological change were behind the decline in good jobs, then we would expect that a higher – probably substantially higher – share of workers with a four-year college degree or more would have good jobs today.

“Instead, at every age level, workers with four years or more of college are actually less likely to have a good job now than three decades ago.  This development is even more surprising because the economy also has almost twice as many workers

with advanced degrees today as it did in 1979.

 “We believe, instead, the decline in the economy’s ability to create good jobs is related to a deterioration in the bargaining power of workers, especially those at the middle and the bottom of the income scale.  The main cause of the loss of bargaining power is the large-scale restructuring of the labor market that began at the end of the 1970s and continues to the present.

“The share of private-sector workers who are unionized has fallen from 23 percent in 1979 to less than 8% today.  The inflation-adjusted value of the minimum wage today is 15 percent below what it was in 1979.  Several large industries, including trucking, airlines, telecommunications, and others, have been deregulated, often at a substantial cost to their workers,” the two pointed out.

Workers are also hurt by privatizing and outsourcing of state and local government jobs, and trade policy that “put low- and middle-wage workers in the United States in direct competition with typically much lower-wage workers in the rest of the world.  A dysfunctional immigration system has left a growing share of our immigrant population at the mercy of their employers, while increasing competitive pressures on low-wage workers born in the United States.”

And the government concentrated on controlling inflation rather than creating jobs, except in the last half of the 1990s, the two said.  “These policy decisions, rooted in politics, are the main explanations for the decline in the economy’s ability to generate good jobs.”

The drop would have been far worse had U.S. workers not become far more educated, the two said.  In 1979, 19.7 percent of workers had college degrees or better, and now 34.3 percent do.  Conversely, the share of U.S. workers with less than a high school diploma dropped from 19.7 percent in 1979 to 7 percent now.

Had that education shift not occurred, the two wrote, the share of good jobs in the U.S. economy would have dropped by more than 10 percentage points over the last 33 years, down to 17.1 percent in 2010.  “In 2010, only 3.9 percent of workers with less than a high school degree were in a good job, compared to 18.2 percent in 1979.  Among high school graduates, 14.7 percent were in good jobs in 2010, compared to 24.4 percent in 1979,” they said.

The issue of job quality has yet to arise in the political campaign, as the nation still struggles with jobless rates around 8%. Unions contend politicians should address it, but aren’t.  Schmitt and Jones did not address the politics of the decline in good jobs, other than to note that past political decisions were partially responsible for the drop.

Photo: (Carrie Sloan) // CC 2.0