McJobs and the Fading Middle Class

I know it’s difficult — for a pajama-clad citizen journalist and others — to concentrate on more than one story or issue at a time. So for the past few weeks we’ve been fretting mostly about Osama bin Laden and Pippa. (Note: Mention of Pippa is a gratuitous reference to wake up the search engines in the early a.m.)

Anyway, back to jobs — and what’s happening to the middle class, or what’s left of it, in the USA.

First, I’m glad McDonald’s is hiring. And good for those — young, old and in between — who want or need to work there. But what’s this say about our economy? And about the disappearing middle class?

Here’s from an interesting article on The Huffington Post by Andy Kroll, a staff writer at Mother Jones, “How the McEconomy Bombed the American Worker: The Hollowing Out of the Middle Class“:

Think of it as a parable for these grim economic times. On April 19th, McDonald’s launched its first-ever national hiring day, signing up 62,000 new workers at stores throughout the country. For some context, that’s more jobs created by one company in a single day than the net job creation of the entire U.S. economy in 2009. And if that boggles the mind, consider how many workers applied to local McDonald’s franchises that day and left empty-handed: 938,000 of them. With a 6.2% acceptance rate in its spring hiring blitz, McDonald’s was more selective than the Princeton, Stanford, or Yale University admission offices.

It shouldn’t be surprising that a million souls flocked to McDonald’s hoping for a steady paycheck, when nearly 14 million Americans are out of work and nearly a million more are too discouraged even to look for a job. At this point, it apparently made no difference to them that the fast-food industry pays some of the lowest wages around: on average, $8.89 an hour, or barely half the $15.95 hourly average across all American industries.

On an annual basis, the average fast-food worker takes home $20,800, less than half the national average of $43,400. McDonald’s appears to pay even worse, at least with its newest hires. In the press release for its national hiring day, the multibillion-dollar company said it would spend $518 million on the newest round of hires, or $8,354 a head. Hence the Oxford English Dictionary’s definition of “McJob” as “a low-paying job that requires little skill and provides little opportunity for advancement.”

Then Kroll opines about the “rise of the McWorker”:

The evidence points to the latter. According to a recent analysis by the National Employment Law Project (NELP), the biggest growth in private-sector job creation in the past year occurred in positions in the low-wage retail, administrative, and food service sectors of the economy. While 23% of the jobs lost in the Great Recession that followed the economic meltdown of 2008 were “low-wage” (those paying $9-$13 an hour), 49% of new jobs added in the sluggish “recovery” are in those same low-wage industries. On the other end of the spectrum, 40% of the jobs lost paid high wages ($19-$31 an hour), while a mere 14% of new jobs pay similarly high wages.

As a point of comparison, that’s much worse than in the recession of 2001 after the high-tech bubble burst.  Then, higher wage jobs made up almost a third of all new jobs in the first year after the crisis.

The hardest hit industries in terms of employment now are finance, manufacturing, and especially construction, which was decimated when the housing bubble burst in 2007 and has yet to recover. Meanwhile, NELP found that hiring for temporary administrative and waste-management jobs, health-care jobs, and of course those fast-food restaurants has surged.

Indeed in 2010, one in four jobs added by private employers was a temporary job, which usually provides workers with few benefits and even less job security. It’s not surprising that employers would first rely on temporary hires as they regained their footing after a colossal financial crisis. But this time around, companies have taken on temp workers in far greater numbers than after previous downturns.  Where 26% of hires in 2010 were temporary, the figure was 11% after the early-1990s recession and only 7% after the downturn of 2001.

As many labor economists have begun to point out, we’re witnessing an increasing polarization of the U.S. economy over the past three decades. More and more, we’re seeing labor growth largely at opposite ends of the skills-and-wages spectrum — among, that is, the best and the worst kinds of jobs.

At one end of job growth, you have increasing numbers of people flipping burgers, answering telephones, engaged in child care, mopping hallways, and in other low-wage lines of work. At the other end, you have increasing numbers of engineers, doctors, lawyers, and people in high-wage “creative” careers. What’s disappearing is the middle, the decent-paying jobs that helped expand the American middle class in the mid-twentieth century and that, if the present lopsided recovery is any indication, are now going the way of typewriters and landline telephones.

OK. McDonald’s is an easy target. And that’s unfair because that company didn’t cause the crisis we are now facing as a nation when it comes to generating and maintaining well-paying jobs that allow an individual or family to be secure in the middle class. We pissed many of those jobs away during the past two or three decades mostly through faulty trade policies and tax laws that have encouraged our multinational corporations to either outsource jobs to other countries or hire in those countries where wages are lower. So it goes. And I’m told that many who join McDonald’s in what I’ll call counter jobs go on to careers with the company in management after receiving excellent training and on-the-job experience.

Let’s see what David Brooks, writing in the NYT this morning, has to say about all this:

So Americans should be especially alert to signs that the country is becoming less vital and industrious. One of those signs comes to us from the labor market. As my colleague David Leonhardt pointed out recently, in 1954, about 96 percent of American men between the ages of 25 and 54 worked. Today that number is around 80 percent. One-fifth of all men in their prime working ages are not getting up and going to work.

According to figures from the Organization for Economic Cooperation and Development, the United States has a smaller share of prime age men in the work force than any other G-7 nation. The number of Americans on the permanent disability rolls, meanwhile, has steadily increased. Ten years ago, 5 million Americans collected a federal disability benefit. Now 8.2 million do. That costs taxpayers $115 billion a year, or about $1,500 per household. Government actuaries predict that the trust fund that pays for these benefits will run out of money within seven years.

Part of the problem has to do with human capital. More American men lack the emotional and professional skills they would need to contribute. According to data from the Bureau of Labor Statistics, 35 percent of those without a high school diploma are out of the labor force, compared with less than 10 percent of those with a college degree.

Part of the problem has to do with structural changes in the economy. Sectors like government, health care and leisure have been growing, generating jobs for college grads. Sectors like manufacturing, agriculture and energy have been getting more productive, but they have not been generating more jobs. Instead, companies are using machines or foreign workers.

The result is this: There are probably more idle men now than at any time since the Great Depression, and this time the problem is mostly structural, not cyclical. These men will find it hard to attract spouses. Many will pick up habits that have a corrosive cultural influence on those around them. The country will not benefit from their potential abilities.

This is a big problem. It can’t be addressed through the sort of short-term Keynesian stimulus some on the left are still fantasizing about. It can’t be solved by simply reducing the size of government, as some on the right imagine.

A big problem — to say the least. But it’s not one that elected officials, policy makers and other miscreants appear to be spending much time concentrating on.

It’s the economy, stupid. And the country needs jobs — and plenty of them — that provide middle class paychecks and lifestyles.

Otherwise, we are going to be a nation of McWorkers.

Just sayin.’

And by the way, bin Laden might be a little chilly these days because Hell did freeze over this week. A national mainstream publication — The New York Times — wrote an article critical of Cisco Systems, and the Cisco Kid, CEO John Chambers.

For all of us long-suffering Cisco shareholders, enjoy.

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