Unemployment Deconstructed

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The unemployment rate spiked at 6.1 percent last week, the Labor Department reported, the highest since September 2003. Nevertheless, a recent study released by the Heritage Foundation concludes that job quality is improving in the US.

“America is not becoming a nation of low-wage fast-food workers,” said James Sherk, Bradley Fellow in Labor Policy at the Heritage Center for Data Analysis and author of the report. “Job opportunities are expanding with the typical job paying more than it did a generation ago.”

The report indicated opportunities for jobs are “expanding” alongside an increase in wages, particularly in two fields: the professional speciality field ranging from engineers and computer scientists to registered nurses) and the executive/managerial field (including financial managers, marketing specialists and human resources professionals).

Collectively between these two job markets, which are above median pay, there has been an 8.2% increase in their share of the job market since 1980. Both fields are also the highest compensated fields of work available in the job market.

Sherk attributes this statistic to the fact that the economy is shedding jobs that require brawn while creating jobs that mandate brainpower.
“Employers today need fewer workers doing mindlessly repetitive or physically demanding tasks. Computer programs and robots now do much of this work,” he notes. “But computers cannot think for or interact with people, and highly paid jobs that require greater mental skills are an increasingly large part of the economy.”

In this respect, while opportunities are burgeoning in high wage jobs, low-wage occupations are being eliminated from the market. Operators, fabricators and laborers, craft and repair occupations, as well as garbage collectors, clerical workers and administrative support all fell 5.7 percentage points in terms of employment.

The one exception remains the service sector, which increased 3.1 percent. This includes housekeepers, security guards, cooks, health aides and janitors.

But Sherk claims the economy is constantly in flux in this manner, exercising what economists refer to as “creative destruction”: destroying old jobs while creating new ones.
“Computer programmers were as rare in the 1970s as typewriter repairmen are today,” said Sherk. “Some of the jobs … that have disappeared were good jobs, but many were not.”

Another indication that job quality is improving is that wages are increasing for the average American and benefits, such as health insurance, are still as prevalent as in the past.
Discounting foreign-born workers who may distort the data, the average annual income of American-born workers spiked 27 percent in two decades, and only 1.3 percent of the population earns minimum wage ($5.85).

Surprisingly, low-wage earners saw the largest income growth.
The study showed: “the annual incomes of workers in the bottom 10 percent by wage rose 39 percent between 1980 and 2000—more than in any other income group. The incomes of workers at the 25th percentile rose 21 percent during this period.”

Average hourly earnings rose 28 percent between 1993 and 2006 as did average annual earnings by 18 percent. Median hourly earnings and median annual earnings rose almost 20 percent in the same time span.

Perhaps the most politically revealing news is the rich aren’t getting richer while the poor grow poorer, as commonly espoused by democrats. Earnings grew at all income levels, the study showed.

“The incomes of workers in the top 10 percent have risen 20 percent since 1993,” wrote Sherk. “The incomes at the bottom 10 percent are up 18 percent.”
Sherk’s study suggested workers are just as likely to have health insurance as in previous years. In 1995, 80.7 percent of American-born workers had employer-provided health insurance, compared to 2006 when 80.5 percent of workers had insurance covered by employers, a virtual statistical equivalent.

The study also found that pension coverage rates have been stable throughout the years.
As for the future of the job market, Sherk said, “the best estimates indicate that despite the current weakness in the economy, long-term job growth will continue to occur in higher-paying occupations. Today, the typical American works in a better job than his or her parents did, and his or her children will probably work in a better job still.

Emily Miller is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.