The August jobs report was unremarkable, both for the middling numbers (169,000 new jobs in August and downward revisions to the June and July reports) and for the continuation of a couple of troubling trends. Unemployment ticked down a notch (to 7.3 percent), but only because more people dropped out of the labor force. And job growth remained heavily concentrated in low-wage sectors like retail and restaurants.
The poor quality of recovery job growth is underscored if we dig below the surface of these sectoral patterns. We know that retail and food services are dominated by low wages and meager benefits. But other sectors encompass a wider array of occupations and wages. Growth in manufacturing, for example, may be less important than where (subsector, region, wage range) in manufacturing those jobs are being added. Consider the “Business and Professional Services” sector. The sector employed 18 million Americans on the eve of recession in December 2007, and shed 1.6 million jobs during the recession. In the recovery (since June 2009), it has added 2.1 million jobs—for a net gain across the last business cycle of about half a million jobs. The average hourly earnings across the sector (as of July 2013) is $23.68.
But the impact of the recession and recovery can only really be assessed by looking at gains and losses at a more detailed sectoral or industrial breakdown. Losses are especially stark in high-wage services allied with construction: architectural and engineering services, for example, shed 130,000 jobs during the recession and have only gained about two-thirds of these back. Other predictably cyclical sectors—such as advertising and travel—also took big hits from which they have not yet recovered. Of the 2.1 million jobs gained sector-wide during the recovery, large swaths were in low-wage subsectors—including 95,000 jobs in temporary help services (average hourly earnings $15.55/hr), 87,000 jobs in janitorial services ($11.61/hr), 57,000 jobs in private security ($14.67), 52,000 jobs in telemarketing ($15.37), 50,000 in armored car services ($13.37), and 34,000 jobs in landscaping ($14.87). This uneven pattern of job loss and gain in business services is captured in the graphic below, which shows the trajectory of jobs—at various levels of sectoral detail—from 2001 through July 2013. Average annual earnings run from red to green, with the color ramp centered on the sector-wide average of $23.68.
At first blush (looking at “all professional and business services”) we see a simple cyclical trajectory, the two upward slopes marking recovery from the recessions that began in 2001 and 2007. If we break the sector into its three major (“2 digit NAICS code”) components we can see that about half of those jobs are in the lower-wage “administrative and waste services” subsector. At the next (“4 digit”) level of detail, the prominence of low-wage employment services and building services is apparent. And, in the most detailed view, the thick, low-wage strata (temporary help, janitorial, landscaping, security) are starkly evident—both as a share of overall sectoral employment and as the leaders of a low-wage recovery.
Colin Gordon is a professor of history at the University of Iowa. He writes widely on the history of American public policy and is the author, most recently, of Growing Apart: A Political History of American Inequality, published by the Institute for Policy Studies at www.inequality.org