The March 2015 Meme of Job Growth, Low Wages
A March 11 article on Fox&Hounds Daily by Michael Bernick, former California Employment Development Department director & Milken Institute fellow, commented on state and federal jobs reports issued on March 6 showing strong job gains, with weak wage growth. Both reports showed that job gains were strong, but were being accompanied by weak wage growth; many jobs are being created and/or sustained, but they are not good-paying jobs.
The federal report showed that on the national level, 295,000 net new jobs were added in February, but average hourly earnings increased by only .01%. Jim Puzzanghera of the Los Angeles Times entitled his summary of the federal jobs report, "Disappointing wage growth adds sobering note to strong jobs report." Gus Faucher, a senior economist at PNC Financial Services, tells Puzzanghera that "that’s the missing piece of the labor market puzzle, better wage growth."
On the state level, the report for January found a very impressive 67,300 jobs created. Though wage gain information was not available on March 6 for the state level, other recent studies in California have noted the strongest job growth in California is generally in lower-paying sectors, such as hospitality. Research program specialist Brandon Hooker tracked average hourly earnings for the United States and California since 2007. In the period between January 2014 and January 2015, the nation’s wage gains totaled only 2.2%. On the state level, the period between December 2013 and December 2014 saw wage gains of 1.4%.
Bernick asks the question: "Is there a puzzle as economist Faucher suggests concerning the strong job growth and low wage gains?" Bernick stated that various explanations have been put forward in the past month, ranging from the usual ones of technology, globalization, and the weakness of private sector unions to more exotic ones involving "pent up wage cuts."
In conclusion, Bernick suggests that each of these factors should be more fully discussed in California policy discussions of 2015. So too should be an additional factor: the continued importation of workers, directly and indirectly, not only in tech and agriculture, but in a wide variety of occupations and sectors. What are the impacts of this importation of workers on wages, along with the impacts (positive and negative), on jobs for others, and on a middle-class society in California? Should we care about a middle-class society? How much are we benefiting from cheaper goods and services, and how much are we ignoring the costs, including costs of public services? These are discussions for some time overdue.