"The Low-Wage Recovery - National Employment Law Project"

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National Employment Law Project
DATA BRIEF
April 2014
The Low-Wage Recovery:
Industry Employment and Wages Four Years into the Recovery
More than six years after the start of the 2008 recession, private sector employment is only just now
returning to prerecession levels. Since employment hit bottom in February 2010, NELP has issued a series
of reports tracking job growth, first by industry and later by occupation. Drawing on a variety of data sources,
these analyses reached the same conclusion: Employment growth during the early recovery was heavily
concentrated in lower-wage industries and occupations.
This data brief updates our initial, industry-based analysis, tracking job losses and gains by median hourly
wage and comparing the most recent recovery to the recovery following the 2001 recession. We find that
low-wage job creation was not simply a characteristic of the first phase of the recovery, but rather a pattern
that has persisted for more than four years now. Deep into the recovery, job growth is still heavily
concentrated in lower-wage industries. As a result of unbalanced employment growth, the types of jobs
available to unemployed workers, new labor market entrants, and individuals looking to move up the career
ladder are distinctly different today than they were prior to the recession.
There continues to be an imbalance between the industries where the recession’s job
losses occurred and the industries experiencing the greatest growth four years into the
recovery.
Lower-wage industries accounted for 22 percent of job losses during the recession, but 44 percent
of employment growth over the past four years. Today, lower-wage industries employ 1.85 million
more workers than at the start of the recession.
Mid-wage industries accounted for 37 percent of job losses, but 26 percent of recent employment
growth. There are now 958,000 fewer jobs in mid-wage industries than at the start of the recession.
Higher-wage industries accounted 41 percent of job losses, but 30 percent of recent employment
growth. There are now 976,000 fewer jobs in higher-wage industries than at the start of the
recession.
Private sector employment growth over the current recovery is stronger than it was
following the 2001 recession, but job growth is more concentrated in lower-wage industries.
Four years into the current recovery, private sector employment growth is stronger than it was at the
same point following the 2001 recession. Nevertheless, it has taken longer to restore prerecession
employment levels as job losses were greater relative to the earlier recession.
Employment gains following the 2001 recession were polarized, with lower- and higher-wage
industries accounting for a near-equal share of job growth. In comparison, the recent recovery is
driven largely by lower-wage industries, with higher-wage industries accounting for a significantly
smaller share of employment growth.
75 Maiden Lane, Suite 601, New York, NY 10038 ▪ 212-285-3025 ▪ www.nelp.org
National Employment Law Project
DATA BRIEF
April 2014
The Low-Wage Recovery:
Industry Employment and Wages Four Years into the Recovery
More than six years after the start of the 2008 recession, private sector employment is only just now
returning to prerecession levels. Since employment hit bottom in February 2010, NELP has issued a series
of reports tracking job growth, first by industry and later by occupation. Drawing on a variety of data sources,
these analyses reached the same conclusion: Employment growth during the early recovery was heavily
concentrated in lower-wage industries and occupations.
This data brief updates our initial, industry-based analysis, tracking job losses and gains by median hourly
wage and comparing the most recent recovery to the recovery following the 2001 recession. We find that
low-wage job creation was not simply a characteristic of the first phase of the recovery, but rather a pattern
that has persisted for more than four years now. Deep into the recovery, job growth is still heavily
concentrated in lower-wage industries. As a result of unbalanced employment growth, the types of jobs
available to unemployed workers, new labor market entrants, and individuals looking to move up the career
ladder are distinctly different today than they were prior to the recession.
There continues to be an imbalance between the industries where the recession’s job
losses occurred and the industries experiencing the greatest growth four years into the
recovery.
Lower-wage industries accounted for 22 percent of job losses during the recession, but 44 percent
of employment growth over the past four years. Today, lower-wage industries employ 1.85 million
more workers than at the start of the recession.
Mid-wage industries accounted for 37 percent of job losses, but 26 percent of recent employment
growth. There are now 958,000 fewer jobs in mid-wage industries than at the start of the recession.
Higher-wage industries accounted 41 percent of job losses, but 30 percent of recent employment
growth. There are now 976,000 fewer jobs in higher-wage industries than at the start of the
recession.
Private sector employment growth over the current recovery is stronger than it was
following the 2001 recession, but job growth is more concentrated in lower-wage industries.
Four years into the current recovery, private sector employment growth is stronger than it was at the
same point following the 2001 recession. Nevertheless, it has taken longer to restore prerecession
employment levels as job losses were greater relative to the earlier recession.
Employment gains following the 2001 recession were polarized, with lower- and higher-wage
industries accounting for a near-equal share of job growth. In comparison, the recent recovery is
driven largely by lower-wage industries, with higher-wage industries accounting for a significantly
smaller share of employment growth.
75 Maiden Lane, Suite 601, New York, NY 10038 ▪ 212-285-3025 ▪ www.nelp.org
The Distribution of Employment Growth Across Industries
NELP’s earlier report,
A Year of Unbalanced
Growth, sorted disaggregated industries based on median
hourly wage into three wage categories (lower, mid, and higher), each representing approximately one-third
of total employment. Across each group, we tracked job losses and job gains from January 2008 to January
2011. This current report extends the analysis through February 2014—just over six years after the start of
downturn and four years into the labor market recovery.
Private sector employment has finally reached prerecession levels, but Figure 1 illustrates that job losses
and gains are unevenly distributed across industries. Previously, we found that mid- and higher-wage
industries absorbed significant job losses during the downturn and that early job gains were concentrated in
lower-wage industries. Several official revisions to the underlying employment data did not materially alter
our findings about job loss patterns, and net job growth remains concentrated in lower-wage industries
where employment now exceeds prerecession levels by 1.85 million. Today, there are nearly two million
fewer jobs in mid- and higher-wage industries than there were before the recession took hold.
Lower-wage industries accounted for only 22 percent of job losses during the downturn, but 44
percent of jobs gained over the past four years.
Mid-wage industries accounted for 37 percent of job losses, but only 26 percent of job gains.
Higher-wage industries accounted for 41 percent of job losses, but only 30 percent of job gains.
Figure 1. Net Change in Private Sector Employment (in thousands)
Source: NELP analysis of Bureau of Labor Statistics data, see Appendix A for details.
Note: Wage ranges are updated from earlier reports to adjust for inflation and are in 2013 dollars. At the time of
publication, employment data for disaggregated industries was only available through February 2014.
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Job Loss and Recovery During the Great Recession and its Aftermath
The focus of this report is on the private sector, which is solely responsible for employment growth over the
past four years.
During the economic downturn, private sector employment declined by 8.8 million, measured from
peak employment in January 2008 to a low in February 2010 (Figure 2).
Since hitting bottom, private sector employment has increased for 49 consecutive months as
employers added 8.9 million jobs through March 2014. Just over six years after the start of the
recession, employment levels have finally returned to the previous peak (Figure 2).
While the focus of this report is on the private sector, government employment actually declined by
627,000 over the recovery period. Education at the local level accounted for 44 percent of job losses
across government entities.
Figure 2. Private Sector Employment (in thousands), January 2000 to March 2014
Source: NELP analysis of Bureau of Labor Statistics data, see Appendix A for details.
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Comparing the 2008 and 2001 Recessions
The “jobless recovery” following the 2001 recession restored private sector employment to prerecession
levels four and a half years after job losses began (Figure 2). That it took nearly two years longer to close the
private sector employment deficit following the recent recession is attributable to the severity of job losses,
rather than the rate of recovery. Private sector employment growth is stronger four years into this recovery
than it was over a comparable period following the 2001 recession (Figure 3); although, neither recovery
resulted in strong employment gains relative to earlier recessions.
2001 recession: Lower- and higher-wage industries led the recovery, accounting for 39 and 40
percent of employment gains, respectively (Figure 3). Mid-wage industries added jobs at just over
half the rate of lower- and higher-paying industries.
2008 recession: Employment growth is more concentrated in lower-wage industries where private
sector employment grew by over 10 percent. Job growth is stronger in mid-wage industries relative
to the earlier recovery; although, initial job losses were also more severe this time. The share of net
job growth accounted for by higher-wage industries declined from 40 percent following the 2001
recession to only 30 percent over the recent recovery.
Figure 3. Four Years of Private Sector Job Growth, 2001 and 2008 Recessions
Source: NELP analysis of Bureau of Labor Statistics data, see Appendix A for details. At the time of publication,
employment data for disaggregated industries was only available through February 2014.
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Drivers of Unbalanced Growth: Industry Trends
One year into the recovery, we noted that slow growth in higher-wage industries was likely the result of
specific drivers of the Great Recession, including the housing bubble collapse and financial crisis, as well as
a continuation of the long-term decline in durable and nondurable manufacturing and telecommunications.
Three years later, mid- and higher-wage industries are adding jobs; albeit, not at a fast-enough rate to fill
employment deficits in many cases (see Tables 1 and 2 in the Appendix). Nevertheless, four years into the
recovery, growth remains strongest in low-wage, service-providing industries (e.g., retail, restaurants, and
temporary help) and industries less affected by recessions (e.g., health and education).
The food services and drinking places, administrative and support services (includes temporary help),
and retail trade industries are leading private sector job growth during the recent recovery phase (Figure
4). These industries, which pay relatively low wages, accounted for 39 percent of the private sector
employment increase over the past four years. Job growth in the food services and drinking places and the
administrative and waste services industries has more than offset employment declines during the
downturn; however, despite strong growth, retail trade employment is still below the previous peak.
The professional, scientific, and technical services industry—an industry with one of the highest median
hourly wages—also posted significant gains, adding nearly 839,000 jobs through March 2014 while
accounting for 9.4 percent of the private sector employment increase. Major occupations within this industry
include accountants, lawyers and legal professionals, software developers, and engineers. While strong job
growth in this higher-wage industry is a positive development, the employment increase is over six
percentage points less than it was at a similar stage following the 2001 recession.
Strong private sector employment growth also continues in the education and health services sector.
Relatively immune to downturns, this was the only sector to add jobs over both the downturn and recovery,
pushing employment nearly 13 percent higher than it was at the start of the recession. Within this high-
growth sector, the lower-wage industries social assistance and nursing and residential care facilities
employ a combined 6.5 million workers and pay a median hourly wage of less than $13.
Construction, durable goods manufacturing, wholesale trade, transportation and warehousing—
industries often associated with good-paying, blue-collar jobs—also posted strong employment growth
during the recovery. However, because of the magnitude of job losses, employment in construction, durable
goods manufacturing, and wholesale trade remains far below peak levels, while employment in
transportation and warehousing just barely exceeds the previous peak. Construction employment, for
example, is still 20 percent below the previous high. Employment in non-durable manufacturing, which
includes food and textile manufacturers, increased little over the recovery and is 11 percent lower than at
the start of the recession.
Over the past four years, private sectors gains have been partially offset by public sector job losses
resulting from budget cuts at the federal, state, and local levels. Net job losses totaled 627,000 across all
levels of government during the recovery period. Employment declines were particularly severe at the local
level, where education absorbed nearly three-quarters of the 378,000 net job losses over the past four
years.
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