Labor Market Improves for Low-Income Earners; U.S. Economy Rejoices?

The recession that engulfed the United States economy from December 2007 to June 2009 was the longest experienced by the country since the Great Depression. It wiped 8.4 million jobs, or 6.1 percent of all payroll employment, pushing the unemployment rate from 5 percent on the eve of the recession to a peak of 10 percent in October 2009 before dropping to 9.5 percent by the end.

Even though the jobless rate has slowly edged down, hitting 6.3 percent as of April, the improvement of that statistic hides many problems. While the economy has created jobs for the past 50 consecutive months — and at least as many jobs have been created as were lost in the recession — unemployment data still point to an unhealthy economy: long-term unemployment remains high, labor participation is weak, and workers have little leverage to push for wage growth.

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The pace of job creation has gained momentum, but the strongest employment gains in the weak recovery have come from low-wage industries: work at retail outlets, fast-food restaurants, and providing home healthcare. Higher-paying jobs in blue collar industries, like construction and manufacturing, have not recovered to pre-recession levels. And it has been well documented how the recession turned middle-class jobs into low-wage jobs.

For lawmakers and the White House, the important question is how job creation in low-wage industries will impact the economy. By association, the question extends to whether it is good news for the broader workforce that greater employment in low-wage industries is pushing incomes higher for those workers.