The value of labor

The new employment figures mean good and bad news. The good news is that 165,000 jobs were created in April, while the bad news is that almost two-thirds of them were in lower-paying fields.

The monthly report shows a significant decrease in the unemployment rate to 7.5%. This is a positive sign, especially for the unemployed, that the economy is bringing people into the workforce.

The concern here is that the majority of the jobs being created pay much lower wages than the jobs that evaporated during the latest recession. The jobs created in April were in fields like hotels and restaurants, retail and temporary help. In those jobs, salaries and benefits are lower than, for example, in construction and government, two sectors that did not add any jobs last month.

This is a worrisome phenomenon, since it decreases individual purchasing power, which in turn delays the economic recovery with weak domestic consumption.

At the same time, this widens the income and wealth gap in society, one that has reached historically high levels. In the past, this type of situation has proven to be destabilizing in the long term.

The reasons for this outlook are many. Technology developments and the importance of formal education are keys to defining the changes in workforce outlook and salaries.

Another factor that impacts the job market is the corporate focus on profitability at any cost, where labor is an expense to be decreased continuously. In addition, labor unions have lost much of their influence. The current pay disparity between workers and corporate executives is more similar to the one prior to the crisis of the 1930s rather than that of the ’50s, which was less unequal in a more prosperous economy.

Providing job training for the working class and access to education are parts of the solution, as is setting a decent minimum wage that is above the poverty level. Minimum wage used to refer to students working temporarily during their vacations at a fast-food restaurant. Today, it applies to adults with families.

The decrease in unemployment is great news. But behind the figures, there is a grave economic outlook that must be turned around by revaluing the work of employees.