How Recession Is Hastening the Wal-Martization of America
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With all the focus on the drama surrounding the debt ceiling, and the much-too-late focus on the economic pain the final deal's austerity agenda will inflict, items that really matter—jobs, jobs, and jobs--have been all but ignored.
But a new report by the National Employment Law Project looking at the jobs created since the recession officially ended brings the focus sharply back to jobs, and its findings are frightening: 73 percent of the jobs created since the supposed economic recovery began have been in low-wage fields, where workers make between $7.51 (the national minimum wage) and $13.52 an hour ($15,621 to $28,122 a year for full-time).
In contrast, 60 percent of the layoffs from the Great Recession were in what the report calls midwage occupations, those that make between $28,142 and $42,973 per year.
“But in the weak recovery to date, employment growth has been concentrated in lower-wage occupations, with minimal growth in midwage occupations and net losses in higher-wage occupations,” the report notes.
This report further cements the argument that progressives have been making for a while: that corporations and the wealthy have bounced back in large part on the backs of the working people of the U.S., squeezing more work for less money out of American workers while returning to record profits, salaries and bonuses.
An economy built on low-wage jobs is inherently unstable and bad for everyone, not just the people struggling to feed themselves and their families on $7.51 an hour.
Continuing the Recession
Replacing living-wage jobs with low-wage jobs is an excellent way to continue sluggish economic growth. It's not rocket science: people who make less money have less money to spend, and less spending means less incentive to hire. It's the vicious cycle of recession, and the reason why government spending has been necessary in the past to put people back to work.
And those effects are already visible— consumer spending was down in June and barely grew at all, only 0.1 percent, in the second quarter.
But misguided Washington obsession with deficits is going to lead to cuts that will directly hurt the most vulnerable—and that includes the working poor as well as the unemployed. As Joshua Holland wrote:
“Last year, with the private sector economy continuing to slump, an analysis by Moody's Analytics found that almost one in five dollars in American consumers' wallets came from one government program or another. The public sector has already seen deep cuts, and that trend will only worsen with Washington's relentless focus on deficit reduction.”
As the government shrinks its spending, it's worth noting that workers in low-wage jobs are often dependent on government programs even while they work. Wal-Mart, for instance, has long been criticized for relying on the government to make up the slack between its rock-bottom wages and what it actually takes for a person to survive. In 2004, a study in California found that Wal-Mart employees relied on food stamps, Medi-Cal (the state version of Medicaid) and subsidized housing to the tune of $86 million annually. With an economy made up of low-wage workers and unspecified cuts still to come, those workers will have to cut back on their already bare-bones spending just to continue to survive.
Real economic recovery will require not just job creation, but living-wage jobs that allow working people to spend and stimulate growth. A crisis of demand won't be solved by keeping people poor.
The argument that we must reduce deficits has been given a ludicrous amount of coverage and credence among the governing class, punditry, and even the public since the beginning of the Great Recession. Yet it is worth pointing out, if only for a second, that when progressives argued for a debt ceiling deal that would increase “revenues,” that doesn't only mean raising taxes. It also means putting people back to work and raising their real incomes, which in turn raises the amount of taxes they are paying. A person who was making $50,000 a year, was unemployed for two years, and finally takes a job making $30,000 a year is not paying into the system nearly as much as a steadily employed person at $50,000 a year. Multiply that by millions of desperate job-seekers, and, well, the point is obvious.