Weak Economy, Low Pay Leaves Many Full-Time Workers on Public Assistance

By Joe Guzzardi
March 7, 2016
 
Beneath the headlines’ hype about a seemingly improved February Bureau of Labor Statics jobs report lays the uncomfortable truth. Yes, the economy created a higher than anticipated 242,000 jobs, but once again the majority were part-time and/or in low-paying sectors.
 
Posting the most gains were health care, ambulatory services, and social assistance, an aggregate increase of 82,000 jobs. While health care administrators earn a decent salary, the less glamorous jobs in the field pay a modest hourly wage. Retail, food services, bars, and education also added jobs but, as is the case with health care, the positions are hourly, and subject to management’s discretion—when sales are strong, personnel is added; when sales are weak, people get laid off.
 
On the whole, adding employment in these sectors will not contribute to a more vibrant economy, especially when wages and the average hours worked per week drop, as they did in February. Stronger hiring in manufacturing and mining means the economy is humming. Unfortunately, manufacturing and mining which includes oil, lost jobs. Tara Sinclair, chief economist for Indeed.com, a major job placement site, refers to the phenomena as a bifurcated labor market: robust demand for service employees which pump up jobs’ totals, but weak demand for blue collar jobs. The New York Times called the jobs report proof of “polarization” in the labor market.
 
In their effort to paint the rosiest possible picture, analysts overlooked the mathematical reality that 242,000 jobs makes only a tiny dent to offset the 8.2 million unemployed, the millions more under-employed, and the more than 90 million detached from the labor force.
 
A dire Economic Policy Institute analysis reported that 41.3 million Americans or 30 percent of the labor pool receive public assistance. Nearly half of them, 19.3 percent, have full-time jobs. In fact, the jobs they hold are often the ones the Wall Street analysts crowed about in their positive reading of the February data—retail, hospitality, and health care. With profits and chief executive officers’ salaries soaring, the burden of subsidizing underpaid workers through welfare benefits falls to taxpayers.
 
Another variable in the American hiring picture is rarely discussed even through the data are important and readily available on the BLS Household Employment and Current Population surveys. Since President Obama’s inauguration in 2009, nearly four million foreign-born immigrants have entered the labor market, 4.4 times faster than American-born. In 2009, nearly 15 percent of all working persons were immigrants. Over the next seven years through February 2016, the foreign-born workers’ share rose to nearly 17 percent. 
 
Much of February’s job growth came, it should be noted, in areas that rely heavily on immigrant labor especially hospitality and hospital services. An ever-increasing immigrant population, more than one million legal immigrants annually and 750,000 guest workers each year, have led to the inevitable displacement of American workers from jobs they need to sustain their families.
 
Since federal immigration policy isn’t tied to the labor market’s health, or to automation advancements, Americans should expect over the coming years, at worst, more job losses or, at best, continued wage stagnation and dilution in their take home pay.