The U.S. job market sketches a sunny picture with an average of
approximately 209,000 jobs created over the last six months - the
best clip of gains since the end of the 1990s. Meanwhile, the
national unemployment rate in July, standing at 6.2%, marks the
eighth consecutive month of a jobless rate below 7%. With the
recent uptake in the jobs created in professional and business
services, manufacturing, retail trade and construction, the economy
envisages brighter days ahead.
However, a detailed scrutiny of the fresh job additions reveals
a disturbing brew of statistics. While the U.S. economy has
recouped all jobs lost during the recession, what it hasn't been
able to regain is the lost income.
The Income Backdrop Looks Cloudy
According to a report by IHS Global Insight, an economic
consulting company, the average annual income of jobs lost between
2008 and 2009 was $61,637, while the average for those gained
through the second quarter of 2014 was $47,171. The jobs recovered
since the end of the recessionary period have thus, as a whole,
been less rewarding than the ones lost.
Furthermore, the top 20% of the highest earning households saw
their incomes rise a handsome 51% in 2012 compared with 43.6 % in
1975. Meanwhile, growth was even greater for the top 5% of the
wealthiest Americans. So while the rich were busy getting richer,
the poor were forced to pinch pennies.
The two sectors that lost the maximum number of jobs during the
recession are manufacturing, with average pay of about $63,000, and
construction, at about $58,000. Employment in these two fields
still stands at about 3 million workers short of where it was at
the start of 2008.
Looking further into the labor market, the picture only gets
gloomier. The labor force participation rate, which is the
percentage of the available workforce that's employed or actively
looking for work, has been on a downtrend. The current rate of
62.9% compares unfavorably with 66.1% before the recession. This is
because many workers who lose decent-paying jobs basically wait for
those jobs to return, drawing unemployment insurance as long as
possible and then stepping out of the labor force. Moreover, the
long-term unemployed (those out of work over 27 weeks) share is at
32.9%, versus 19.1% before the recession.
Manufacturing Recovery on Track
While low-wage manufacturing jobs have added to the ordeal of
workers, it has been a blessing for manufacturers. With a low
labor-cost component, U.S. manufacturers are becoming increasingly
competitive. A labor cost advantage could actually end up drawing
more companies to the U.S. and help create millions of job
Boston Consulting Group predicts that the growing U.S. Cost
Advantage could help the country capture between 700,000 and 1.3
million new manufacturing jobs by 2020, plus as many as 3.5 million
additional jobs through increased economic activity and exports.
Interestingly, a growing number of American companies are now
reversing the off-shoring trend and drawing manufacturing back to
The list of manufacturers that came back home over the past few
years includes biggies like General Electric Co. (
), Apple Inc. (
), Nike, Inc. (
), Google Inc. (
), Ford Motor Co. (
), Caterpillar Inc. (
) and Wal-Mart Stores Inc. (
). While most of these manufacturers have migrated some of their
products and/or operations to the U.S., Walmart has notably pledged
to support the revival of domestic manufacturing by expending $50
billion through 2023 on U.S.-made goods.
The U.S. manufacturing sector is witnessing a structural shift
toward becoming a technology-driven industry that pays decent wages
to skilled workers. With an increasing number of U.S. factories
opening up and the pool of available skilled labor shrinking,
manufacturing wages are ought to rise.
However, even as the U.S. manufacturing is making something of a
comeback, the benefits are yet to trickle down to the breadwinners.
And we are all earnestly waiting for that. After all, a revival
rejoiced by millions is more celebratory than the one confined to
just a few firms.
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