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CNN.com, October 25, 2004
(CNN) -- The domestic debate this election season has centered
on job creation, with both candidates using Labor Department statistics
to support their own arguments. But now that the economy has been
added nearly 2 million jobs since last summer, economists are looking
critically at the quality of these new jobs, to determine whether
they are paying less than the ones we've lost.
A new study from the University of California at Berkeley, using the
most detailed classification of jobs and distribution of wages so
far found that, since 2001, job categories that are growing pay an
average of 10 percent to 12 percent less than jobs categories that
are shrinking. A new full-time position would therefore pay about
$4,000 a year less than one of the jobs that were lost.
Compared with overall job creation, data on the quality of jobs are
not as straightforward. There are no official government statistics
on the pay of jobs lost versus the pay of jobs gained. That's why
there has been a sudden flurry of studies rebutting one another on
the issue of job quality.
"The shortcoming thus far has been to not do a full, comprehensive
analysis of the jobs," said Arindrajit Dube, an economist at
UC Berkeley's Institute of Industrial Relations and the author of
the latest study. "But if one doesn't do it comprehensively,
you can cut it different ways and draw different conclusions."
A June study by USA TODAY and Economy.com concluded that lower-wage
jobs were growing faster than higher-wage jobs, based on analysis
of lower and higher-paying industries. Morgan Stanley's chief global
economist, Stephen Roach, drew similar conclusions in his July study
by industry.
It's possible, however, that generally lower-paying industries, such
as the restaurant industry, are adding more higher paying jobs such
as chefs and managers, researchers at FactCheck.org noted. In a July
study, FactCheck.org used new Bureau of Labor Statistics data to conclude
that a more detailed breakdown of occupations within industries suggests
that job quality is actually increasing.
The Economic Policy Institute countered by using the same BLS data
to arrive at the opposite conclusion. The FactCheck.org study forgot
to weight its sectors by their contribution to overall employment,
the EPI pointed out.
Dube's study attempted to overcome each of these flaws and anticipate
others. He looked at both occupations and industries to create 440
job categories. Rather than just use average earnings, he looked at
the entire distribution of jobs and the wages they pay. And to back
up the findings, Dube showed his conclusions were consistent over
various time periods within the nearly four-year scope of the study.
The result, he said, is a clear picture of a wage gap between growing
and shrinking jobs.
In one positive sign for job growth, however, Dube's study showed
jobs in the middle sector, such as electronics manufacturers and clerical
workers, have been recovering from large losses during the 2001 recession.
"The good news is that finally there seems to be some growth
in jobs at the middle," Dube said. "But the bad news is
that growth in jobs in the bottom third outpaces those in the middle
by roughly two to one. The other bad news is that finally middle-wage
jobs are growing, but that's typically at the expense of higher-paying
jobs."
Add to this the past year's trend of stagnant wages, which Dube also
shows in his study, and a difficult employment environment prevails.
After all of the slicing and dicing of employment data, one conclusion
is incontrovertible: this economy, despite strong economic growth,
is still not creating a sufficient number of jobs, high paying or
otherwise. Therein lies the challenge for the next administration,
whomever is elected on November 2.
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