A Quarter Of Jobs In America Pay Below The Federal Poverty Line

Tyler Durden's picture

Over two years ago (and reiterated last year) Zero Hedge first wrote on what was and is an undisputed transition within the US labor force: a shift from full-time to temp, or part-time labor, with virtually no contractual or welfare benefits, and where workers are lucky to get minimum wage. This is because in the "New Normal" where copious amounts of structural slack are pervasive due precisely to the Fed's constant flawed micromanagement of the economy, the US has now become an "employers' market."

Furthermore, we were the first to make the critical distinction that it is absolutely not all about the quantity of jobs, but much more importantly, the quality of the new jobs being created. However, just like 99% of the general public, and all of the mainstream media, has an inborn genetic disorder preventing it from grasping the distinction between nominal and real, so these two critical aspects of the US jobs market languished unperturbed. Until now, two years later, when we are happy to see that the mainstream media has finally caught up with what our readers knew in December 2010.

From the NYT, and long overdue:

Politicians across the political spectrum herald “job creation,” but frightfully few of them talk about what kinds of jobs are being created. Yet this clearly matters: According to the Census Bureau, one-third of adults who live in poverty are working but do not earn enough to support themselves and their families.

 

A quarter of jobs in America pay below the federal poverty line for a family of four ($23,050). Not only are many jobs low-wage, they are also temporary and insecure. Over the last three years, the temp industry added more jobs in the United States than any other, according to the American Staffing Association, the trade group representing temp recruitment agencies, outsourcing specialists and the like.

 

Low-wage, temporary jobs have become so widespread that they threaten to become the norm. But for some reason this isn’t causing a scandal. At least in the business press, we are more likely to hear plaudits for “lean and mean” companies than angst about the changing nature of work for ordinary Americans.

The "some reason" is that absent from the occasional mention here and there, few if any are aware of what is truly going on beneath the surface of America's (part-time) jobs (non) recovery. 

Sadly, while the NYT is accurate up to this point, from here on out they too lose the narrative:

How did we arrive at this state of affairs? Many argue that it was the inevitable result of macroeconomic forces — globalization, deindustrialization and technological change — beyond our political control. Yet employers had (and have) choices. Rather than squeezing workers, they could have invested in workers and boosted product quality, taking what economists call the high road toward more advanced manufacturing and skilled service work. But this hasn’t happened. Instead, American employers have generally taken the low road: lowering wages and cutting benefits, converting permanent employees into part-time and contingent workers, busting unions and subcontracting and outsourcing jobs. They have done so, in part, because of the extraordinary evangelizing of the temp industry, which rose from humble origins to become a global behemoth.

Actually, the primary reason for the surge in part-time jobs over the past 4 years has everything to do with the ongoing Depression, which few are willing to call it for what it is, and, you guessed it, the Fedeal Reserve. Why? We once again refer readers to an article posted nearly a year ago "How The Fed's Visible Hand Is Forcing Corporate Cash Mismanagement" in which we explained that since the advent of ZIRP culture, companies have proceed to i) hoard cash as corporate management is well aware the current artificial economy is a temporary blip on an otherwise inevitable decline back into global economy purgatory and ii) spend what little cash can be disposed off to generate immediate shareholder returns, in the form of stock buybacks, dividends, and when these are impossible, M&A. Alas, the last thing corporations spend capital on is actual organic growth, so desperately needed if they are to be able to afford a viable employee base. Alas, as we showed two days ago, core capital spending has now been declining virtually non stop since posting a modest Y/Y rebound after the Lehman failure.

It is the chart above that shows in no uncertain terms what the corporate vote of confidence in the US economy is. With the consolidated CapEx trendline decidedly lower and to the right, one thing is certain: the part-time normal is here to stay, as more and more people make the minimum part-time wage their daily routine, all the while the BLS, and the administration both lie in broad daylight that the US economy is currently in a recovery.

And while the rest of the NYT piece is mostly fluff, the conclusion is relatively accurate:

The temp industry’s continued growth even in a boom economy was a testament to its success in helping to forge a new cultural consensus about work and workers. Its model of expendable labor became so entrenched, in fact, that it became “common sense,” leaching into nearly every sector of the economy and allowing the newly renamed “staffing industry” to become sought-after experts on employment and work force development. Outsourcing, insourcing, offshoring and many other hallmarks of the global economy (including the use of “adjuncts” in academia, my own corner of the world) owe no small debt to the ideas developed by the temp industry in the last half-century.

 

A growing number of people call for bringing outsourced jobs back to America. But if they return as shoddy, poverty-wage jobs — jobs designed for “Never-Never Girls” rather than valued employees — we won’t be better off for having them. If we want good jobs rather than just any jobs, we need to figure out how to preserve what is useful and innovative about temporary employment while jettisoning the anti-worker ideology that has come to accompany it.

And that means differentiating the US work force and making it highly specialized, and attuned to a new world in which increasingly more unskilled labor is being outsourced or outright replaced by conveyer automation and robotics. Alas, that means providing incentives for people to get off the couch, learn a skill, and specialize. And that, courtesy of that other central planning tenet, namely providing each and everyone with just the barely sustainable minimum of welfare entitlement to keep people satisfied and voting for the same person over and over, guarantees that more will fall into the trap of having no marketable skills, and be without even part-time opportunities.

At least, until the welfare funding runs out. Then things get really ugly.