Two years into the recovery, the majority of new jobs being added to the economy pay just $13.83 per hour or less, a new report from the National Employment Law Project (NELP) shows.

While the job losses during the recession were concentrated in mid-wage occupations, the subsequent employment gains continue to come heavily in low-paying jobs, reinforcing a rise in inequality that has been shaping the U.S. economy for decades.

“The recovery continues to be skewed toward low-wage jobs, reinforcing the rise in inequality and America’s deficit of good jobs,” said study author Annette Bernhardt, Policy Co-Director at the National Employment Law Project, in a press release. “While there’s understandably a lot of focus on getting employment back to pre-recession levels, the quality of jobs is rapidly emerging as a second front in the struggling recovery.”

The report, an update to NELP’s past analyses of job trends during and after the Great Recession, finds that the lower-wage occupations that have grown the most during the recovery include retail salespersons, food preparation workers, laborers and freight workers, waiters and waitresses, personal and home care aides, and office clerks and customer representatives.

• Lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth.
• Mid-wage occupations were 60 percent of recession losses, but only 22 percent of recovery growth.
• Higher-wage occupations were 19 percent of recession job losses, and 20 percent of recovery growth.

The report also argues that industry dynamics are playing an important role in shaping the unbalanced recovery. For example, three low-wage industries (food services, retail, and employment services) added 1.7 million jobs over the past 2 years, fully 43 percent of net employment growth. At the same time, better-paying industries (like construction; manufacturing; finance, insurance and real estate; and information) did not grow, or did not grow enough to make up for recession losses. Other better-paying industries (like professional and technical services) saw solid growth, but not in their mid-wage occupations. And steep cuts in state and local government have hit mid- and higher-wage occupations the hardest.

“In part, we're seeing the continuation of the longer-term rise in inequality, but at the same time, the Great Recession is leaving a very strong imprint,” said Bernhardt. “The financial and housing crises, the loss of manufacturing, and the steep cuts in state and local services – those have all hurt growth in better-paid occupations.” The report also places these findings in the context of job growth trends since the start of the century. As shown in this graph, since the first quarter of 2001, employment has grown by 8.7 percent in lower-wage occupations and by 6.6 percent in higher-wage occupations. By contrast, employment in mid-wage occupations has fallen by 7.3 percent.

In addition, the wages paid by these occupations has changed. Since the first quarter of 2001, real median wages for lower-wage and mid-wage occupations declined (by 2.1 and 0.2 percent, respectively), but increased for higher-wage occupations (by 4.1 percent).

“The economy has fewer good jobs now than it did at the start of the 21st century,” said Bernhardt. “Indeed, it’s important to recognize that the U.S. labor market was already in trouble before the Great Recession, the result of 30 years of growing wage inequality and shrinking numbers of good jobs.”

While globalization and technology are often cited in explaining rising inequality, the report emphasizes that failures in public policy have significantly contributed to the trend.

“If we want to understand what’s happened to the average American worker over the past 30 years, we have to look at the decline in the real value of the minimum wage. We have to look at deunionization. We have to look at the growth of subcontracting and contingent work. And frankly, we have to acknowledge that the post-war social contract is broken. We’ve seen strong productivity growth over the last 30 years, but the majority of workers have not seen that translate into their paychecks,” said Bernhardt.

“There is no single magic bullet, but there are plenty of policies we could institute right now that would help enormously. We need to extend unemployment benefits, raise the minimum wage, create jobs by repairing our infrastructure, and help our states avoid more layoffs of teachers, cops and firefighters. It’s just a question of political will and leadership,” she said.

The National Employment Law Project is a nonpartisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit www.nelp.org.