Why are most American jobs low paid

Low unemployment and a booming economy are based on creating precarious jobs

In the USA, jobs in the low-wage sector have been increasingly created since 1990, the gap between low-income and high-income earners is widening, and the employment rate, especially among boys, is falling

In the USA it is similar to in Germany. The economy has been doing well for a long time, unemployment is low, the stock market is booming, credit is cheap, wealth is growing. People are doing better than ever before, everyone has a share in the growing prosperity, satisfaction is high, is preached by those who want to leave everything as it is, while glossing over reality for many.

Obviously, this is the case in the United States. There is evidence of this. According to a survey by the Financial Health Network, which asked about their financial situation last year, the proportion of Americans struggling to cope with their income has remained the same despite economic growth. Only 29 percent of Americans are financially "healthy", on the other hand 70 percent have problems with an aspect such as earnings, debts, retirement planning, savings or paying bills. Twenty percent of middle-class employees who make between $ 30,000 and $ 100,000 say they spend more than they make. Four percent more than in 2018. 20 percent of women are stressed because of money, and 13 percent for men.

A total of 17 percent are considered financially at risk. In addition to the uncertainty, there is apparently the fact that income can fluctuate considerably. The organization measures "financial health" on a 100-point scale. More than half of those surveyed last year experienced an average change of 7.5 points up or down. According to a survey by the Urban Institute last year, nearly 40 percent of Americans struggle every month to meet basic expenses such as rent, groceries, or medicine.

Low wage earners in the downward loop

The background is that the economy and falling unemployment are based on stagnating salaries or creating increasingly precarious jobs. According to a new U.S. Private Sector Job Quality Index (JQI), which is compiled by scientists from Cornell University, the Coalition for a Prosperous America, the University of Missouri, Kansas City, and the Global Institute for Sustainable Prosperity, the quality of jobs has been around since the 1990s 14 percent down. In the years before the financial crisis, the situation had improved briefly, only to have fallen sharply since then, with a low in 2012, which the index is now approaching again. The index compares higher-paid jobs with more hours to lower-paid jobs with fewer working hours. Ultimately, quality is measured by the weekly earnings from a job.

Since 1990, more and more precarious jobs have been created in the United States. Over 60 percent of the jobs in production and in non-managerial jobs that have been created since 1990 are in the low-wage sector. In the 1990s, 47 percent of these jobs were still in the high-wage sector. A total of 105 million people are employed here, 85 percent of all employees in the private sector. Earn 58 million, or more than half, less than the average American wage, which is $ 793 a week. In most cases they also do not receive any company health insurance or other subsidies.

The wage gap between low and high wage earners has widened significantly. In 1990 the difference in weekly income was 104 US dollars, but in 2018 it rose to 402 US dollars, adjusted for inflation. From 2004 onwards, the gap continued to widen rapidly. In part, this is due to higher hourly wages in the high-wage sector, but above all, according to the researchers, to a decrease in working hours from 31 hours per week in 1999 to 30 hours per week in 2018; in the high-wage sector, where an average of 38.4 hours per week is worked, it was only 24 minutes. If an hour has been lost among low-wage earners, that sounds insignificant, according to the scientist, with the average weekly working time of 34 hours in this area, this would be over 3 million fewer jobs.

After peaking in the 1990s, the employment rate in the USA has been falling since 2000, particularly sharply since the financial crisis, also known as the Great Recession in the USA. It is now 63 percent of the working population (compared to 76 percent in Germany). The scientists write that this is not just a consequence of the increase in the elderly, especially since the aging population is falling. While the employment rate among people over 64 has risen sharply since the financial crisis, that of 25-64 year olds fell from 67 percent of the age cohort to 59 percent after a peak in the late 1990s. And the boys between 16 and 24 years of age have also fallen since then, which is not only due to the fact that more are in training. The peak here was also 67 percent in the early 1970s. Up until the financial crisis, the rate in the cohort had slipped to 52 percent; since the financial crisis it has fallen even faster and is now 51 percent.

The increase in jobs in the service sector from 73 percent in 1990 to now, after a surge during the financial crisis to 83 percent, also plays a role. Jobs in the service sector are usually less well paid than those in manufacturing. There has been a dramatic slump here since the 1960s. In 1960 the earnings for service jobs at 97 percent were only slightly below those for jobs in goods production, until the 1980s the ratio fell to 67 percent and has improved somewhat since then, but has stagnated at 73 percent since 2015. Between 2000 and In 2010, around 5 million, mostly better-paid, jobs were lost in industry, which usually led to a loss of income. (Florian Rötzer)

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