Thursday, March 10, 2011

Obama's recovery: working less, for lower pay

It's swell how the Obama Administration's crack economic team is remaking work in America:

• Lower-wage industries -- things like retail and food preparation -- accounted for 23 percent of the jobs lost during the recession, but 49 percent of the jobs gained over the last year, a recent study (pdf) by the National Employment Law Program found. Higher-wage industries, by contrast, accounted for 40 percent of the jobs lost, but just 14 percent of the jobs gained. In other words, low paying jobs are increasing as a percentage of total jobs, while high-paying jobs are on the decline.

• Meanwhile, the percentage of those working who have part-time jobs and want full-time ones surged in mid-February to 19.6 percent -- almost as high as it was a year ago before the recovery began, according to Gallup numbers. That suggests, of course, that a large number of the new jobs created over the last year are part-time.

• And a recent Wall Street Journal analysis found that even though productivity rose 5.2 percent from mid 2009 to the end of 2010, wages increased by just 0.3 percent. That means only 6 percent of productivity gains were shared with workers. In past recoveries, that figure has averaged 58 percent. This time around, far more of the gains went to shareholders, in the form of profits, which are at record levels.

What this means is that even as the headline unemployment figure declines, the total wage base (on which income taxes are assessed and from which consumers spend the money that generates sales taxes) will not recover to its pre-recession levels. And, in turn, that means that Federal and State tax revenues will not recover along with nominal employment numbers.

To grow our way out of our fiscal problems, we'd need high-paying, full-time jobs. Since the Obama Recovery isn't producing those, we're left with the only alternative: cut government spending drastically. (Historical experience teaches that raising taxes reduces tax revenue in the long run.)

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