Job Quality in the Upside Down Economy

Eileen Appelbaum, Ph.D.Professor, School of Management and Labor Relations

Director, Center for Women and Work RutgersThe State University of New Jersey

Presentation for

Righting the Upside Down Economy: Creating a Sustainable Economy

Center for American ProgressMayflower Hotel, Washington, DC

July 1, 2004

Center for Women and Work

Rutgers University

Despite Expansionary Macro Policies, Share of Americans with

Jobs Declining

Source: CEPR analysis of BLS data: Current Population Survey

What Is Happening to Job Quality?

•Establishment data: 1.35 million net new jobs created May 2003 to May 2004

◊ 56% were in low-wage service industries Household data: 1.27 million increase in employment

◊ Part-time employment increased by 674,000 equivalent to 53% of the increase in employment

Real wages are decliningLong-term trend: Lots of poor quality, low-paying jobs

Private Sector Job Growth: May 2003-May 2004Selected Industries (Establishment Data)

IndustryMay-03 (000)

May-04 (000)

Change (000)

Total Non Agriculture 129,873 131,224 1,351

Goods Producing 21,859 21,902 43 Manufacturing 14,574 14,405 -169

Service Producing 108,014 109,322 1,308 Retail Trade 14,917 15,060 143 Temporary Help 2,200 2,458 258 Service to Bldgs & Dwellings 1,629 1,682 53 Home Health & Nursing Home 2,309 2,337 28 Child Day Care 758 775 17 Food Service & Drinking Places 8,533 8,792 259 Subtotal Selected Service Producing Jobs 758

Center for Women and Work

Rutgers UniversitySource: BLS The Employment Situation: June 2004, Table B-1

Part-Time Job Growth: May 2003-May 2004

(Household Data)

May-03 (000)

May-04 (000)

Change (000)

Total Employment 137,505 138,772 1,267

Part-time Employment 23,151 23,825 674 (non agricultural)

Center for Women and Work

Rutgers UniversitySource: BLS The Employment Situation: June 2004, Table B-1

Real Average Hourly Earnings Total Private Sector (1982 Dollars)

Year Real WagesPercent Change

from Previous Year

May 1995 7.50 --May 1996 7.54 0.5May 1997 7.67 1.7May 1998 7.88 2.7May 1999 8.00 1.5

May 2000 8.03 0.4May 2001 8.13 1.2May 2002 8.21 1.0May 2003 8.28 0.9May 2004 8.22 -0.7

Center for Women and Work

Rutgers UniversitySource: U.S. Dept of Labor, BLS, National Employment, Hours & Earnings.

Employment Change by Wage Quintile 1999-2002

-200,000

-100,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Highest 2nd Highest Middle 2nd Lowest Lowest

Jobs

Source: BLS, Occupational Employment Statistics.Source: BLS, Occupational Employment Statistics. Progressive Policy Institute, May 2004.

Top Ten Occupations with Largest Job Growth, 2002-

2012

Source: D.E. Hecker, “Occupational Employment Projections to 2012,” Monthly Labor Review, Feb. 2004, Table 4

(Numbers in thousands of jobs) Employment Change Rank by 2002 Most significant source

median annual of postsecondaryOccupation title 2002 2012 Number Percent earnings (a) education or training

Registered nurses 2,284 2,908 623 27 1 Associate degreePostsecondary teachers 1,581 2,184 603 38 1 Doctoral degreeRetail salespersons 4,076 4,672 596 15 4 Short on-the-job trainingCustomer service reps. 1,894 2,354 460 24 3 Medium on-the-job trainingFood prep & serving workers 1,990 2,444 454 23 4 Short on-the-job trainingCashiers, except gaming 3,432 3,886 454 13 4 Short on-the-job trainingJanitors and cleaners except 2,267 2,681 414 18 4 Short on-the-job training maids and housekeepingGeneral operations managers 2,049 2,425 376 18 1 Bachelor's or higher + work exp.Waiters and waitresses 2,097 2,464 367 18 4 Short on-the-job trainingNursing aides, orderlies, and 1,375 1,718 343 25 3 Short on-the-job training attendant

Note: (a) 1 = $41,820 and over (very high), 2 = $27,500 to $41,780 (high), 3 = $19,710 to $ 27,380 (low), and 4 = below $19,601 (very low). These are quartile rankings. That is, a quarter of wage and salary workers earn $41,820 or more, a quarter earn less than $19,601, and so on.

Center for Women and Work

Rutgers University

Projected Job Growth by Wage Quintile: 2002 to 2012

0

5

10

15

20

25

Highest SecondHighest

Middle SecondLowest

Lowest

Job Growth (%)

Source: BLS, Occupational Employment Statistics. Progressive Policy Institute, May 2004.

Why Aren’t These Middle Class Jobs?

Can’t blame foreign competition or outsourcing

No countervailing force to the blind and mistaken pursuit of profit◊ Unions lack membership density◊ Government has abdicated responsibility for

setting minimum acceptable standards Low-wage policies not good for companies

Higher Wages = Higher ProfitsCostco vs. Wal-Mart

Costco Wal-Mart’s Sam’s Club

Average hourly wage $15.97 $11.52*Annual health costs per worker $5,735 $3,500Covered by health plan 82% 47%Annual retirement costs per worker $1,330 $747Covered by retirement plans 91%** 64%Employee turnover 6% a year 21% a yearLabor and overhead costs 9.8% of sales 17% of sales***Sales per square foot $795 $516Profits per employee $13,647 $11,039Yearly operating income growth**** 10.1% 9.8% *Excludes 25% of workforce that is lower paid part-time workers **Those on the job for less than a year are not covered ***For all Wal-Mart****Over the past 5 years in the U.S.

Source: S. Holmes and W. Zellner, “The Costco Way,” BusinessWeek, April 12, 2004, pp. 76-77

Center for Women and Work

Rutgers University

What Can Government Do? •Help companies be good employers – reestablish standards in labor markets

◊ Raise minimum wage and peg to half the average wage (=$7.75 today)

◊ Guarantee minimum number of paid sick days◊ California-style Paid Family Medical Leave

•Bring health care costs under control•Innovative training for incumbent workers•Support creation of local networks of firms

◊ Provide access to training, resources◊ Benchmark technology, management, quality◊ Seek out new niche and export markets