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Unemployment rate disguises true extent of jobs crisis
Through its groundbreaking research and tireless public education, Minnesota’s JOBS NOW Coalition has challenged conventional economic wisdom for nearly 30 years. The coalition consists of more than 100 organizational members who come together around the belief that all workers should have the opportunity to attain a decent standard of living. Below, Southside Pride’s Dick Taylor interviews JOBS NOW’s education director, Kevin Ristau.
SSP: What is the main focus of JOBS NOW’s research?
JOBS NOW: Our research centers on two questions usually ignored by mainstream economists: What is the job gap? and What is the wage deficit?
JOBS NOW defines the job gap as the ratio between job seekers and job openings; and we define the wage deficit as the share of jobs that pay less than a family-supporting wage. By measuring both the job gap and the wage deficit, we get a more accurate and meaningful picture of the labor market than by looking only at conventional indicators like the unemployment rate or the federal poverty line.
The great weakness of the unemployment rate as an indicator lies in its failure to measure economic opportunity (or the lack of it) for workers, especially workers who either need a job or want a better one. To find the job gap we can look at the state’s Job Vacancy Survey, which is compiled twice a year by the Minnesota Department of Employment and Economic Development. The survey not only shows the number of unemployed workers, or job seekers, throughout the state but also shows the number of unfilled jobs, or job openings.
For an unemployed or underemployed worker in South Minneapolis, it’s more useful to learn that there are still five job seekers in the Twin Cities for every full-time job opening than to be told that the state’s unemployment rate has finally dropped below 6%.
What’s more, whereas the unemployment numbers treat all jobs as equal, the job vacancy numbers answer questions about the quality of job openings: They tell us whether jobs are full-time or part-time, whether they offer health care, how much education or training they require, and, finally, how high the wage levels are.
SSP: What does the most recent Job Vacancy Survey tell us about the quality of the job openings in the Twin Cities metro area?
JOBS NOW: The median wage for all job openings in the seven-county metro area is $11.53 per hour. (A median is a midway point; half of the jobs are above it, half below.) For many workers in the Twin Cities, $11.53 per hour is not enough to make ends meet. JOBS NOW’s Cost of Living in Minnesota research shows that in a metro family of four with both parents working, each worker must earn at least $14.78 per hour to meet basic needs. Readers interested in seeing the Cost of Living research by county should use JOBS NOW’s interactive online Family Wage & Budget Calculator at http://www.jobsnowcoalition.org/calculator/calculator.html.
Nearly one-third of metro job openings are part-time. For these openings, the median wage is $8.50 per hour; only 22% offer health care.
Though we’re often told that the jobs of the future will require advanced technological skills, the survey provides no evidence of a shift to high-skill occupations. Only about half of all metro openings require any education or training beyond high school; and just one-third require a four-year college degree. Given that these figures have changed little over 10 years, the claim that more education will solve the jobs crisis is unfounded.
The survey shows that jobs with high skill requirements pay far more than jobs without them, but it also reveals a shortage of jobs that demand those skills. As long as this shortage persists, raising the skills of the workforce will do little to raise overall wages.
SSP: What kind of changes have we seen in the Twin Cities job market over the last decade?
JOBS NOW: In 2001, the metro region had about 51,000 unemployed workers competing for 72,000 unfilled jobs. For each job seeker, there was more than one job opening. In contrast, by the summer of 2011, the number of job seekers had more than doubled, rising to 104,000. Meanwhile, the number of job openings had fallen to less than 30,000—a drop of nearly 60%.
Here’s another way to think about it: We have twice as many job seekers in the Twin Cities than we had 10 years ago, but less than half as many job openings.
Of the large number of openings that vanished in the Twin Cities over the last decade, only 2% were lost during the Great Recession and its aftermath. Almost all of the decline took place earlier, during the 2001 recession and the two years that followed.
From 2004 through 2007—the best four years of the decade for the metro job market—we gained back only about 1,000 of the 43,000 openings that disappeared in the earlier part of the decade.
The Job Vacancy Survey shows a steep decline in opportunities for workers in the Twin Cities metro region; and it’s a decline that cannot be attributed only to the two recessions. Besides the recessions, we also had four years of recovery when almost nothing was recovered—an entire decade of job market failure.
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