U.S. economy

America's Low-Paying Recovery: More Jobs Than Ever, Worse Wages


A dishwasher at a restaurant in San Francisco on July 9

Photograph by Noah Berger/Bloomberg

A dishwasher at a restaurant in San Francisco on July 9

Jobs created since employment in the U.S. began expanding again tend to pay significantly less than the ones that were lost in the steep downturn, according to a new wage study prepared for the U.S. Conference of Mayors.

The U.S. economy lost nearly 9 million jobs from the start of 2008 through the start of 2010, and close to half of those losses were in two high-paying sectors, manufacturing and construction, according to the study by IHS Global Insight (IHS), an economic consulting company. The new report, released Monday by New York City Mayor Bill de Blasio and Boston Mayor Marty Walsh, puts the average pay in job-losing sectors at $61,637 in today’s dollars.

The recovery has been disappointing from the perspective of pay. From early 2010 through mid-2014, while the economy gained a little more than 9 million jobs, the fastest growth came in the low-paying accommodation and food sector; this year the average annual wages in the sector are just under $21,000. Only the fifth-fastest-growing sector since 2010 has been a high payer: professional, scientific, and technical employment, with average annual wages in today’s dollars of about $87,000. For job-gaining sectors as a whole, the weighted average of pay has been just $47,171 a year.

The “wage gap,” in the report’s terms, is a shortfall of 23 percent, which is even bigger than the 12 percent gap following the 2001 recession.

Befitting a report written for mayors, the study delves into income by metro area. Brownsville-Harlingen, Tex., has the largest share of households earning less than $35,000—55 percent. Washington-Arlington-Alexandria, which spans the District of Columbia and parts of Virginia, Maryland, and West Virginia, has the biggest share of households with income of $75,000 or more—58 percent.

Looking ahead, IHS Global Insight projects median household income to rise 2.5 percent this year and then 3.8 percent annually from 2015 through 2017. It picks Lawrence, Kan., to have the fastest growth over the four-year period: 5.3 percent.

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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