The joyless recovery
Mishel, Lawrence & Bernstein, Jared
We are stuck in the midst of the most feeble economic recovery since World War II. Gross domestic product (GDP) is currently growing at an annual rate of 2.4 percent, well below the 4.9 percent...
...We are stuck in a vicious circle of slow growth...
...This is the only postwar recovery in which unemployment was no lower after twenty-eight months of recovery...
...For instance, the ratio of the average wage of a college graduate to that of a high school graduate grew from 137.7 percent in 1979 to 155.7 percent in 1989...
...This was true over the 1980s, even in the face of GDP growth rates higher than today's...
...In contrast, every other recovery saw a significant reduction (14.5 percent on average) in the number of people working part time involuntarily...
...What has happened to education differentials in the recovery...
...This is about 2.8 million short of the average 3.4 million net job gain that occurred in earlier business cycles...
...The wages of women at the 40th percentile, for instance, did not grow from 1989 to 1993, but wages grew 2 percent at the median and 3.6 percent at the 90th percentile...
...This group of labor-force "absentees," not counted among the unemployed, consists of people who have stopped looking for work or never looked for work because they were pessimistic about their prospects...
...Part-time and Temporary Work This recovery can be criticized not only for failing to produce the jobs necessary to lower unemployment, but also for creating too many part-time and temporary jobs...
...Wages are declining for virtually all male workers and among low-wage female workers...
...Poverty rates have been "stuck" at historically high levels...
...In July 1993, there were 6.5 million involuntary part-time workers...
...but because the wages of high school graduates fell even faster, the college/high school wage differential continued to grow...
...The most visible indicator of poor economic performance is the failure of the unemployment rate to fall in this recovery...
...If we calculate the net job gain since the prior business cycle peak, we find there have been just 563,000 jobs gained over the current business cycle...
...Since wages fell more for blue- than for white-collar men-5.9 percent versus 2.4 percent—during the 19891993 period, there was continued growth in the blue-collar/white-collar wage differential...
...Turning to occupational trends, the early 1990s saw blue-collar wages fall and whitecollar wages remain stagnant, continuing the trends of the 1980s...
...For example, 526,000 (27.7 percent) of the 1.9 million jobs created in the recovery were provided by temporary-help agencies—a remarkable contribution for an industry comprising less than 2 percent of total employment...
...Among men, wages fell for every educational group except graduate degree holders, a group made up of just 8.7 percent of the male work force...
...The wage decline among men over the 1989-1993 period occurred in nearly every occupational group...
...Between 1987 and 1991, however, the wages of college graduates fell as well...
...Slow economic growth has forced many workers out of the labor market...
...Investors respond to diminished demand by cutting back on investment plans (despite lower interest rates), thus leading to more slow growth, job losses, falling wages— and the cycle feeds back upon itself...
...At the 90th percentile, however, wages are up 1.2 percent over 1989...
...The wage of non-college-educated workers fell even faster...
...Wage growth among women has been concentrated among the highest-paid half of the female work force...
...Thus, wage inequality among women has 136 • DISSENT Notebook continued to grow during the current business cycle...
...These trends suggest that the rapid expansion of part-time work in the recovery reflects the success of employers in expanding part-time jobs even though employees are shifting their preferences toward full-time jobs...
...Equally noteworthy is that voluntary parttime work has grown by just 168,000, and accounts for just 6.7 percent of total job growth during the recovery...
...The causes of slow growth are the persistence of declining wages and the growth of earnings inequality...
...Since about 14 percent of the work force _typically works in part-time jobs voluntarily, the 6.7 percent expansion during the recovery indicates a decreased worker desire for part-time work...
...Men with lower wages experienced even deeper wage deterioration—about 5 percent over the 1989-1993 period...
...The wage of the average college graduate fell 0.8 percent between early 1992 and 1993...
...Gross domestic product (GDP) is currently growing at an annual rate of 2.4 percent, well below the 4.9 percent average for postwar recoveries...
...Another 26 percent of the new jobs were in government, primarily at the state and local level...
...Among women, only those with college or graduate degrees achieved real wage growth...
...The unemployment rate rose from 5.4 percent to 6.8 percent during the downturn and then rose to as high as 7.6 percent during the recovery before falling to the current 6.8 percent level...
...Joblessness is more widespread than the official unemployment figures indicate...
...All other women lost between 1 and 2 percent of their hourly wage...
...The wage of a male worker at the 80th percentile (meaning that he earns more than 80 percent of the total male work force) has fallen 1 percent during the recovery and 2.2 percent since 1989...
...Furthermore, by continuing down the lowwage, low-growth path, we incur great social costs...
...There has been much discussion of the dramatic growth in the 1980s of the wage differential between college graduates and high school graduates...
...Among men, however, the real hourly wages of both white-collar and blue-collar workers fell during the downturn (1989-1991) and continued to fall during the first two years of the recovery...
...To the extent that the labor market fails to provide opportunities for persons who want to "play by the rules," alternative opportunities, including crime and public assistance, appear more attractive...
...This education-related wage differential grew despite only a modest increase in the wages of college graduates because the wages of noncollegeeducated workers fell a great deal...
...The decline in the wages of college graduates continued...
...Every other postwar recovery produced more than twice as many jobs by the twenty-eighth month...
...Employment Trends Employment grew by 1.9 million jobs in the first twenty-eight months of this recovery...
...Three-fourths of the part-time jobs created in the recovery (482,000) were filled by involuntary part-timers—workers wanting fulltime jobs...
...Among women, in contrast, wages grew in both the downturn and the recovery in nearly every occupational group...
...Thus, wage inequality among men has grown during the recent business cycle, continuing the 1980s trend...
...The fact that wages are falling and good jobs are being lost (and replaced with low-quality jobs) leads to falling disposable income, low consumer confidence, and falling demand...
...Only WINTER • 1994 • 137 Notebook 880,000 (46.3 percent) of the total jobs gained in the recovery were non-temporary, privatesector jobs...
...138 • DISSENT...
...Families with children are particularly devastated by the scourge of poverty: the poverty rate for persons under eighteen was 21.9 percent in 1992...
...While it is true that fewer jobs were lost in this recession than in prior downturns (a loss of 1.4 million versus 1.9 million jobs), this does not explain the slow pace of job gains during this recovery...
Vol. 41 • January 1994 • No. 1
