Where Have All the Good Jobs Gone?

Transcript

1 Where Have All the Good Jobs Gone? John Schmitt and Janelle Jones Ju ly 201 2 Center for Economic and Policy Research 1611 Connecticut Avenue, NW, Suite 400 Washington, D.C. 20009 202 293 - 5380 - www.cepr.net

2 CEPR  i Where Have All the Good Jobs Gone? Contents 1 ... ... ... ... Executive Summary ... ... ... ... 2 Introduction ... ... ... ... ... ” Job Good “ a Defining 3 ... ... 3 ... ... ... ... ... Earnings Health ... ... Insurance ... ... ... 4 6 Retirement ... ... ... ... ... Good Jobs ... ... 7 ... ... ... for Increasing Age 9 and Education ... ... ... Accounting Conclusion ... ... ... ... ... 14 ... References ... ... ... ... 16 About the Authors John Schmitt is a Senior Economist at the Center for Economi c and Policy Research in Washington, D.C. Janelle Jones is a Research Assistant at CEPR. Acknowledgements The authors thank Dean Baker and Heidi Shierholz thanks for helpful comments. CEPR the Ford generous for Foundation Welfare Public and Foundation financial support. the

3 CEPR  1 Where Have All the Good Jobs Gone? Executive Summary The U.S. workforce is substantially older and better educated than it was at the end of the 1970s. - third of US The typical worker in 2010 was seven years older than in 1979. In 2010, over one year college degree or more, up from just one fifth in 1979. - workers had a four - Given that older and better educated workers generally receive higher pay and better benefits, we would have expected good jobs ” in the economy to have increased in line with the share of “ “ good jobs ” in the U.S. economy improvements in the quality of workforce. Instead, the share of has actually fallen. – one that pays at least $37,000 pe By our definition of a good job r year, has employer - provided good - – the share of workers with a “ health insurance, and an employer sponsored retirement plan ” fell from 27.4 percent in 1979 to 24.6 percent in 2010. The total share of good jobs had job sion; in 2007, for example, only 25.0 percent of workers had a declined even before the Great Reces good job by our definition. Our estimates , which control for increases in age and education of the population, suggest that the economy has lost about one - third (28 to 38 percent) of its capacity to generate relative to 1979 good jobs. The standard explanation for the deterioration in the economy ’ s ability to create good jobs is that ’ most workers f technological change. But, if skills have not kept up with the rapid pace o technological change were behind the decline in good jobs, then we would expect that a higher – – workers with a four - year college degree or more would have probably substantially higher share of every age level, workers with four years or more of college are actually good jobs today . Instead, at less likely to have a good job now than three decades ago. This development is even more surprising day as it did in because the economy also has almost twice as many workers with advanced degrees to 1979. We believe, instead, that the decline in the economy s ability to c reate good jobs is related to a ’ of deterioration in the bargaining power of workers, especially those at the middle and the bottom . The main cause o f the loss of bargaining power is the large - scale restructuring of the income scale the labor market that began at the end of the 1970s and continues to the present. The share of private - cent sector workers who are unionized has fallen from 23 percent in 1979 to less than 8 per - today. The inflation adjusted value of the minimum wage today is 15 percent below what it was in 1979. Several large industries, including trucking, airlines, telecommunications, and others, have been workers. Many jobs in state and local government deregulated, often at a substantial cost to their have been privatized and outsourced. Trade policy has put low and middle - wage workers in the - United States in direct competition with typically much lower - wage workers in the rest of the world. A dysfunctio nal immigration system has left a growing share of our immigrant population at the mercy of their employers, while increasing competitive pressures on low - wage workers born in the United States. And all of these changes have played out in a macroeconomic c ontext that has – with the exception of the last half of the 1990s – placed a much greater emphasis on controlling inflation than achieving full employment. In our view, these policy decisions, rooted in politics, are the main explanations for the decline in the economy’s ability to generate good jobs.

4 CEPR Where Have All the Good Jobs Gone? 2  Introduction last three decades, the United States has experienced an the enormous increase in its Over capacity. Compared to the end of the 1970s, the typical worker today is almost twice as productive likely to have a four - year college degree or more, is about seven years older, is working with about 50 percent more physical capital (buildings, machinery, equipment, etc.), and using much more As a direct result, even after the Great advanced technology. the United States was, on a Recession, per person basis, over 60 percent richer in 2010 than it was in 1979. - (See Table 1 .) TABLE 1 Productive Capacity of the U.S. E conomy, 1979 - 2010 Growth in 1979 2010 Workers with a four - year college degree or more 19.7 34.3 (Percent of all workers, 64) age 18 - s 64 Median age of workers, 18 - 34 41 (Years) Capital per worker 100.0 151.4 (Index, 1979=100.0) Workers using computer on job 0 60+ (percent of all workers) GDP per person 28,643 46,904 (2010 dollars) Notes: Workers with a four - year college degree or more and med ian age of workers from authors ’ analysis of Current Population Survey data. Capital per worker from authors analysis of Department of (CPS) ’ , various years, and Bureau of Commerce, Survey of Current Business ing Labor Statistics, Current Employment Statistics. Workers us ’ computer at work is authors estimate based on Department of Commerce (2003, 2011). GDP per person from World Bank, World Development Indicators, converted to 2010 - dollars using GDP chain type price index. we have documented in earlier research, however, the U.S. economy has not managed to As a similar translate this substantial upgrading in the quality of the workforce and capital stock into 1 “ overall job quality. increase Using the definition of a good job ” that we develop in detail below in one that pays at least $18.50 per hour, has employer - provided health insurance, and some kind of – – the share of the U.S. workforce that plan has a good job actually declined from 27.4 retirement took in 1979 to 24.6 percent in 2010. This decline in job quality percent place despite large increases workforce, in average age and educational attainment of the the which suggests that, if not for these improvements in the quality of the workforce, the decrease in good jobs would have been even greater. In fact, our analysis implies that, over the last three decades, the U.S. economy has seen a decline of about one - third in its capacity to generate good jobs. 1 See Schmitt (2005, 2007, 2008).

5 CEPR  3 Where Have All the Good Jobs Gone? In remainder of this report, we first define what we mean by a “ good job ” and spell out our the specific on pay, health insurance, and retirement benefits. We then examine three criteria based in Finally, the distribution of “ good jobs ” using this definition. between 1979 and 2010 we trends of the the large improvements in the quality of impact the U.S. workforce since 1979 on the measure of good jobs. Controlling for this increase in workers ’ age and education allows us to gauge creation extent of the decline in the underlying capacity of the U.S. economy to generate good jobs. the “ Good a ” Defining Job “ good job ” is hard to define – and many reasonable definitions exist. For our A purposes, we seek a both resonates with workers and that can that be measured consistently over the last three definition Pay is obviously central to job quality. Our decades. analysis uses earnings as a key benchmark, but also incorporates health insurance and retirement benefits. Ideally, we would like to include many characteristics of jobs – job security, opportunities for advancement, availability of paid sick other paid health family leave, paid vacation, scheduling flexibility, workplace and safety, and many days, features Unfortunately, data sources exist that track these of jobs over the last three others. no and where there are data on some of these individual job characteristics, the data are not decades, conjunction available with other job quality information such as pay, health insurance, and in retirement benefits. this report, we follow earlier CEPR research and define a good job as one that pays at least In hour (in $18.50 constant 2010 dollars), offers any type of health insurance , and provides some per 2 definition plan. retirement We believe that this simple kind of captures many of the most important features of job quality, both because pay and these core benefits are important on their own terms, but because high pay and the availability of health insurance and retirement benefits are strongly also with desirable job characteristics that we have not other been able to include here. Our correlated also has the highly useful feature of definition measurable, using the Current Population being 3 from 1979 through the present. Next, we (CPS), will describe the three components of our Survey - job measure and how they are measured using CPS data. good Earnings 4 $18.50 job ” in our analysis must pay at least A good per hour, or about $37,000 annually. “ This was median hourly pay, in inflation - adjusted 2010 dollars, for men in 1979. Thus, a good job today the the much, in inflation - adjusted terms, as as typical male earned in 1979. pays 1 shows the trends from 1979 through 2010 in the share of all Figure jobs above this earnings cutoff. 2010, 47.2 percent of the workforce was at or above the earnings threshold, up from 40.6 In This analysis differs slightly from earlier research because the sample of workers here is limited to those who worked at 2 weeks in the calendar year before the March CPS and 26 worked an average of at least 20 hours per week. least 3 The CPS is a large, nationally representative, monthly survey of U.S. households. Each year, the March CPS asks respondents their income, health - insurance coverage, and retirement plan participation during the about preceding calendar year. For further details the CPS, see: http://www.census.gov/cps/. on The values in the text round up from $18.43 per hour and $36,860 per year. All dollar figures in this report are in 4 constant 2010 dollars, deflated using the CPI - U - RS.

6 CEPR  4 Where Have All the Good Jobs Gone? flat in 1979. The share of jobs earning at least $18.50 per hour was essentially percent over the Great 5 47.2 percent in 2007 and percent in 2010. Recession: 46.9 FIGURE 1 Share of Workers above Good jobs Earnings Threshold, by Gender, 1979 - 2010 - 60 Male All 40 Female Percent of Workforce 20 0 1995 1980 1985 1990 2000 2005 2010 March Current Population Survey. Source: Authors ’ analysis of of men at or above the earnings gender. by strongly differ however, trends, Earnings share The share in 2010. At the same time, the 54.6 of cutoff declined from 57.4 percent in 1979 percent to doubled, percent in 1979 to 38.7 from 16.6 than more threshold earnings the clearing women earnings gap, by this measure, fell percent sharply. In 1979, men in 2010. As a result, the gender earn at least $18.50 per hour; by 2010, the were 40.9 percentage points more likely than women to gap had points. percentage fallen 15.9 to Insurance Health that it must have The employer - provided health insurance . second component of a good job is March CPS asked workers if they were covered by Throughout the time period examined here , the whether the employer if paid all, part, or none an employer - provided health insurance plan, and so, of premiums. the plan health - insurance indicator. The first is issues, Several may affect the interpretation of our however, insurance over have changed several times the last that the CPS survey questions related to health biggest on measuring health - insurance coverage from their had changes These decades. three impact to our analysis. Moreover, the effect of almost all sources other than employers, so are less relevant raise respondents who reported having some form of health the survey changes was to the share of not in any qualitative way if we use 2007 or 2010 as the of our analysis. endpoint differ 5 In general, our findings do for but focus the discussion on the most recent data available, 2010. 2010, and for results report e Throughout, w 2007

7 CEPR  5 Where Have All the Good Jobs Gone? insurance. to the extent that the survey changes have an impact on our results, the effect Thus, 6 in bias our results toward finding more good jobs to recent years than in earlier years. be would second issue with the CPS data we use is that a worker must accept health - insurance coverage A in us to observe them as having a job with employer - provided health insurance. A worker for order is have a job where employer - provided health insurance available, for example, but choose not could accept it, and would be designated in our measure as not having a “ good job. ” This to might be of particular concern with respect to married respondents that obtain employer - provided health - In through their spouse. In practice, however, this effect is not likely to be large. insurance coverage less than 14 percent of workers had for example, employer - provided health insurance through 2008, 7 other than their own employer . More importantly, this someone share was roughly similar at the beginning and the end of the three decades, suggesting that movements in spousal coverage are not 8 bias our results in likely direction. either to the CPS does a Finally, job of gauging the quality of workers ’ health - insurance plans. The CPS poor does not, for example, track the value of the underlying premiums, copays, deductibles, annual or lifetime or other aspects of the coverage. The CPS does report a substantial decline in the limits, of employers who pay all of the health - insurance premium, but contains no other consistent share of plan features over the full period. The quality of the underlying medical attention is measures better today than it was three decades ago, but – given greatly expanded efforts to shift certainly the cost of insurance from employers to workers – the quality of the health insurance itself is likely, on measure, be worse average, than three decades ago. Our simple health - insurance to however, today will not capture any of these likely declines in quality. Figure 2 displays the share of workers with an employer - provided health insurance plan . Even without into account the quality of plans offered, employer - provided coverage has sharply taking with 1979 and 2010, the share of workers decreased. coverage fell 16.4 percentage points Between 12.9 percentage points for all workers, and for 7.3 percentage points for women. This trend men, persisted through the Great Recession. a detailed discussion of changes to the 6 CPS For health - insurance questions, see Rho and Schmitt (2010). 7 Rho and Schmitt (2010), Tabl e 4. 8 For a fuller analysis of workers ’ health - insurance coverage from all sources, see Rho and Schmitt (2010) and Schmitt (2012).

8 CEPR  6 Where Have All the Good Jobs Gone? 2 FIGURE 2010 - provided Health Insurance, by Gender, 1979 - Share of Workers with Employer 80 70 60 Percent of Workforce Male All Female 50 1980 1985 1990 1995 2000 2005 2010 March analysis of ’ Source: Authors Current Population Survey. Retirement participation in an employer - sponsored retirement plan. good “ a for requirement final The is job ” the retirement benefits, so any employer - quality Unfortunately, March CPS does not of track the our criteria. Some of these plans will be sponsored plan, regardless of its characteristics , will meet generosity), be typically less traditional, defined - benefit pensions (of varying while some will lines (which also vary substantially of 401(k) the along systems contribution - defined generous plans have been on t he decline over the last three respect to their generosity). Defined - benefit plans with of defined - contribution plan. By 2010 , only decades and most have been replaced by some form 9 about retirement plan. employer The shift from sponsored - half of U.S. workers participated in an a shift in risk from defined - benefit pensions to defined - contribution retirement plans represents on their skill and luck in depends increasingly income retirement whose employees, to employers is not measured in the March CPS, their individual holdings. This additional risk, investing however, much as in the case of health insurance, our measure likely n or in our “ good jobs ” measure. Thus, job quality over time . made has economy the progress any improving overstates in workforce has some kind of employer - sponsored retirement Figure that 3 shows the share of the plan has zigzagged over plan through their current employer. The portion of the workforce with a sharply through most of the 1980s as employers fell coverage Retirement decades. three the last 1990s, as employers began to dropped traditional pensions. Coverage then increased through the pensions. The economic downturn offer lower - cost defined - contribution plans instead of traditional which steep decline in stock prices, however, seems to was by a in the early 2000s, accompanied last three decades 9 in retirement plans in the private sector, see Mishel, For a review of developments over the (2009). Shierholz and Bernstein,

9 CEPR  7 Where Have All the Good Jobs Gone? have off a second wave of declines in set - plan participation. By 2010, the share of retirement participating in a retirement plan at work was 7 percentage points lower than it had been in workers that An interesting additional development is 1979. – si nce the early 2000s – women have been more likely than men to participate in a retirement plan, a substantial reversal of the pattern in the 1980s 1990s. and FIGURE 3 Share of Workers with Employer - sponsored Retirement Plan, by Gender, 1979 - 2010 60 50 Female All Percent of Workforce Male 40 2005 2010 2000 1995 1990 1985 1980 analysis of Current Population Survey. ’ Source: Authors March Jobs Good three individual criteria – earning at least $18.50 per of results the examine now We these combining and an employer - spo nsored participating in health provided - employer having hour, insurance, 2010, 24.6 percent of all jobs met our good - jobs retirement plan. As Figure 4 demonstrates, in standard, down from 27.4 percent in 1979. Over the last three decades, the share of good jobs in the increases in the quality of the workforce and economy fell 2.8 percentage points, despite substantial a person. per GDP in increase percent 63

10 CEPR Where Have All the Good Jobs Gone? 8  FIGURE 4 - Share of Workers with Good Jobs, 1979 2010 30 25 Percent of Workforce 20 1990 2010 2005 2000 1995 1985 1980 Source: Authors Current Population Survey. analysis of ’ March Figure 5 shows large differences in good - job trends by gender. For women, the share in good jobs has grown almost continuously, from 12.4 percent in 1979 to 21.1 percent in 2010. Over the same o period, the share of men in good jobs fell almost 10 percentage points, from 37.4 percent in 1979 t 27.7 percent in 2010. Over the entire period, women were less likely than men were to be in a good market prospects for women generally job, but the gender gap shrank steadily as the labor - improved. FIGURE 5 2010 Good Jobs, by Gender, 1 Share of 979 - Workers with 40 30 Male All Female 20 Percent of Workforce 10 0 2000 1980 1985 1990 1995 2005 2010 Current Population Survey. March Source: Authors ’ analysis of

11 CEPR Where Have All the Good Jobs Gone? 9  Accounting Increasing Age and Education for age noted earlier, over the last three decades, the and educational attainment of the workforce As increased substantially. Given that older and better - educated workers are more has to hold likely good jobs, we would have expected the good - jobs rate to have increased in line with this improvement in the quality of the workforce. That good - jobs share has, instead, declined the suggests that the economy has lost an important part of its underlying ability to generate good jobs. In section, we use the available information about the changing age and educational this the workforce characteristics to estimate the size of the deterioration of in the economy ’ s capacity to produce good jobs. Table 2 and Figures 6a and 6b document the large increase in the age and education of the the workforce 1979. In 1979, almost 20 percent of since workforce had less than a high school degree, by 2010, that share had dropped to just 7 percent. In 1979, about 20 percent of workers but, had a four - year college degree or more; by 2010, the share had increased to 34 percent. Over the 10 same the workforce also aged considerably. In 1979, almost half of workers (47.4 percent) period, between 18 and 34 years old. By 2010, the share in this age range had fallen to one - third (33.4 were Over the same period, the share of workers in the 35 to 54 year - old range increased from percent). of 40 percent to almost 50 percent; and the share workers just below retirement age – 55 under just These 64 – grew from about 13 percent to almost 18 percent of all workers. to demographic shifts combined to raise the median age of the workforce 7 years. As a result of these developments, by 2010, typical worker was substantially older and much better educated than in 1979. the TABLE 2 - 2010 Increases in Age and Educational Attainment of the Workforce, 1979 age - 64) (percent of employees, 18 1979 2007 2010 Education School Less than High 8.0 7.0 19.7 High School 38.5 30.4 29.0 Some College 29.5 29.7 22.1 32.1 College or more 34.3 19.7 Age 18 - 34 47.4 34.1 33.4 35 54 39.5 50.5 49.1 - 55 - 64 13.1 15.5 17.5 Notes: Authors ’ analysis of March Current Population Survey. 10 Our sample throughout is limited to the workforce in the 18 to 64 age range.

12 CEPR  10 Where Have All the Good Jobs Gone? FIGURE 6a Increases in Educational Attainment of the Workforce, 1979 - 2010 50 38.5 40 34.3 32.1 30.4 29.7 29.0 29.5 30 22.1 19.7 19.7 20 8.0 10 Percent of workforce 7.0 0 High School Less than High Some College College or more School 2010 2007 1979 Notes: Authors’ analysis of March Current Population Survey. FIGURE 6b of the Workforce, 1979 2010 Age Increases in - 50.5 49.1 50 47.4 39.5 40 34.1 33.4 30 20 17.5 Percent of workforce 15.5 13.1 10 0 55-64 18-34 35-54 2007 1979 2010 Notes: Authors’ analysis of March Current Population Survey.

13 CEPR  11 Where Have All the Good Jobs Gone? Remarkably, workers at every education level – even those with a college degree or more – though, than less to be in a good job in 2010 they were in 1979 (see Table 3 and Figures 7a and were likely ). In 2010, only 3.9 percent of workers with less 7b than a high school degree were in a good job, compared to 18.2 percent in 1979; among high school graduates, 14.7 percent were in good jobs in with to 24.4 percent in 1979; and for those 2010, a four - year college degree or more, 40.5 compared 43.2 percent were in good jobs in the most recent data, down from percent at the end of the 1970s. The in the good - jobs rate for workers with a four - year college degree or more is especially decline because the share of the workforce with an advanced degree (M.A., J.D., M.D., Ph.D. or striking from 6.5 percent in 1979 to 11.8 percent in 2010. increased similar) TABLE 3 - 2010 Good Jobs, by Education and Age Groups, 1979 age - 64) 18 (percent of employees, 1979 2007 2010 Education Less than High School 18.2 4.3 3.9 High School 15.2 14.7 24.4 22.1 20.9 Some College 27.0 43.2 42.2 College or more 40.5 Age 18 - 34 19.8 15.1 15.0 35 - 34.9 29.7 29.0 54 55 64 32.5 31.6 30.7 - Notes: Authors ’ analysis of March Current Population Survey. FIGURE 7a Good Jobs, by Education, 1979 - 2010 50 40 College or more 30 Some College 20 High School Percent of workforce Less than High School 10 0 2010 1995 2000 2005 1985 1980 1990 Notes: Authors’ analysis of March Current Population Survey.

14 CEPR  12 Where Have All the Good Jobs Gone? FIGURE 7b Age Groups , 1979 - 2010 Good Jobs, by 50 40 30 55-64 35-54 20 Percent of workforce 18-34 10 0 2010 2005 1980 1985 1990 1995 2000 Population Survey. Notes: Authors’ analysis of March Current to have a good job in 2010 than they were in 1979 Workers age level were also less likely every at only percent of workers had a good job in 2010, down from olds, year 34 - to - 18 For 3). Table (see 15 the 2010 rate was 29 percent, compared to 35 olds, year 54 - to - 35 For 1979. in percent 20 almost the share fell to 31 percent in 2010 from 33 percent in 1979. percent in 1979. For 55 - to - 64 year olds, the economy became less and less able to Even as the workforce grew older and better educated, a job. Table 4 summarizes the basics of good provide workers at every age and education level with degree to which the economy has lost its ability a more formal analysis that attempts to measure the 2010 ) , we divide the workforce into twelve and 2007, 1979, ( year each For jobs. good generate to education and - education categories in Table 2. For each of - and - age groups, based on the same age - calculate the share of workers with a good job. In 1979, these 12 groups, separately for each year, we high school degree and between the ages of 35 less with workers of percent 22.7 example, for a than the share of the workforce in each year that fell into each and 54 had a good job. We also calculate percent of all workers were in the group comprised of example, for 1979, In groups. 12 the of 9.2 in the 35 - to - workers year - old age range. Within each year, with less than a high school degree and 54 groups sums to 100 percent, or the total workforce in the 18 - the share of the 12 age - and - education - is rate for “All” good simply the weighted average of the to - 64 age range. Note, also, that the jobs total employment. good - jobs rate for s ’ group share ach s are e weight where the group, each in

15 CEPR  13 Where Have All the Good Jobs Gone? TABLE 4 - Attainment, 1979 2010 Distribution of Good Jobs, by Age and Educational 64) - (percent of employees, age 18 s 2010 2010 1979 2007 1979 2007 Share of Total - Good Good - Share of Total total Share of Good - rate j s ob workforce workforce j ob s rate j ob s rate Education, Age workforce 34 Less than High school, 18 6.4 8.8 3.1 1.3 2.5 1.2 - 54 22.7 3.9 5.3 9.2 3.5 4.3 - Less than High school, 35 64 4.2 22.5 1.0 9.4 1.1 8.8 Less than High school, 55 - 34 6.6 18.5 17.2 10.5 7.1 9.5 - High school, 18 19.1 - 15.1 31.1 15.4 14.5 18.1 High school, 35 54 - 64 5.0 30.9 High school, 55 4.6 20.5 5.0 20.2 34 Some college, 18 19.4 11.0 11.0 11.1 9.9 - 13.1 54 38.0 14.1 28.8 7.0 13.7 27.3 - Some college, 35 64 2.0 Some college, 55 38.1 4.4 28.7 4.9 28.2 - 33.1 34 9.4 - 9.5 10.2 31.9 College or more, 18 32.9 - 54 8.3 52.7 17.1 45.7 College or more, 35 44.2 17.6 College or more, 55 64 2.0 52.2 5.6 46.8 6.5 44.3 - 100.0 27.4 100.0 100.0 24.6 All 25.0 ’ analysis of March Current Population Survey. Notes: Authors of the This overall good - jobs rate – that it feature is simply the weighted average of the good - jobs shares for the 12 age - and - education categories – allows us to examine the effects on the overall good - share with changes in the age - and - education mix of the workforce. We can, for example, jobs 2010, the overall good - jobs share would have been in if we had not had any age or ask what upgrading after 1979. To do so, we simply take the age - and - educational distribution of the education workforce in 1979 (column one of Table 4), rather than the actual 2010 age - and - education rates five , distribution (column and multiply it by the actual 2010 good - jobs ) for the same age - and - education groups (column six ). As Table 5 shows, the resulting calculation suggests that if the eco nomy had not experienced any educational at all between 1979 and 2010, the overall good - jobs rate would have fallen upgrading from its actual 1979 rate of 27.4 to only 17.1 percent (shaded cell in the first row). The 10.3 percent percentage - point decline in the good - jobs rate that would have occurred in the absence of the age - deterioration and upgrading gives one estimate of the education in the underlying capacity of the - economy to generate good jobs. In the absence of observed improvements in the labor force, the about share of good jobs would have fallen 38 percent (10.3/27.4).

16 CEPR  14 Where Have All the Good Jobs Gone? TABLE 5 pgrading on Good Jobs, 1979 ing Population and Educational U - Effects of Ag 2010 s ercent of employees - 64 , with a good job ) (p , age 18 Job Rates from: Good - 2010 Difference Workforce from: 1979 17.1 - 10.3 1979 27.4 - 9.6 34.2 2010 24.6 Difference 6.8 7.5 – 27.4 and 24.6 – g ive the actual good - job rates Notes: The entries on the main diagonal off diagonal entries Figures 4 and 5, and Table 4. The shaded in 1979 and 2010, from - , job rates. For 2007 (not shown in table), the actual rate of good give counterfactual - - good jobs was 25.0 percent. The overall rate of good jobs using the 1979 age - and - jobs rate would be 18.0 pe education distribution and the 2007 good rcent. The overall - education distribution and the 1979 and - - rate of good jobs using the 2007 age good jobs rates would be 33.6 percent. can also use We same data to ask a different question: what would the good - jobs rate have been the if the economy had not lost any of its capacity to generate good jobs between 1979 and 2010 in this case, we use the actual distribution In workers by age and education in 2010 (column 5 2010? of but substitute the of Table 4), rate of good jobs held by eac h group in 1979 (column corresponding 2), when each group was more likely than today to have a good job. As Table 5 summarizes , if the sustained the same capacity to produce good jobs that it had in 1979, the workforce economy had that the economy did experience between 1979 and 2010 would have produced an overall upgrading - rate of 34.2 percent in 2010 (shaded cell in the second row), compared good to the actual rate jobs percent. Once again, we can use the gap between the of actual and hypothetical rates to provide 24.6 of of the deterioration in the underlying capacity estimate the economy to create good jobs. In an this case, the “ 1979 economy ” would have yielded a good - jobs rate of 34.2 percent if it had had the more - - educated workforce available in 2010. That the “ 2010 economy ” could experienced, better produce quality a good - jobs rate of 24.6 percent with the higher workforce suggests that only 1979 and the economy lost about 28 percent (9.6/34.2) of its capacity to generate between 2010 jobs. good Conclusion U.S. workforce is substantially older and better educated than it was at the end of the 1970s. The older and better - educated workers generally receive higher pay and better benefits, we that Given have expected the share of good jobs to have increased in line with improvements in quality would in workforce. Instead, the share of good jobs the the of U.S. economy has actually fallen. Our estimates suggest that, relative to 1979, the economy has lost about one - third (28 to 38 percent) of its to generate good jobs. capacity The standard explanation for the deterioration in the economy ’ s ability to create good jobs is that most ’ skills have not kept up with the workers rapid pace of technological change. The good jobs data, however, are not consistent with that view. If technological change were behind the decline in that good then we would expect jobs, a higher – probably substantially higher – share of workers with a four year college degree or more would have good jobs today . Instead, at e very age level, - workers with four years or more of college are actually less likely to have a good job now than three

17 CEPR  15 Where Have All the Good Jobs Gone? surprising This development is even more ago. because the economy also has almost twice decades as it did in 1979 . as many workers with advanced degrees today ’ s ability to create good jobs is related to a We believe, instead, that the decline in the economy ly those at the middle and the bottom of deterioration in the bargaining power of workers, especial . The main cause of the loss of bargaining power is the large - the income scale scale restructuring of the labor market that began at the end of the 1970s and continues to the present. The share of - sector work private ers who are unionized has fallen from 23 percent in 1979 to less than 8 percent today. The inflation - adjusted value of the minimum wage today is 15 percent below what it was in , 1979. Several large industries including trucking, airlines, telecommunication s, and others , have been deregulated, often at a substantial cost to their workers. Many jobs in state and local government have been privatized and outsourced. Trade policy has put low - and middle - wage workers in the lower United States in direct competition wi th typically much wage workers in the rest of the world. - A dysfunctional immigration system has left a growing share of our immigrant population at the mercy of their employers while increasing competitive pressures on low - wage workers born in the , – with U nited States. And all of these changes have played out in a macroeconomic context that has – placed a much greater emphasis on controlling inflation the exception of the last half of the 1990s than achieving full employment. In our view, these policy decisions, rooted in politics, are the main 11 explanations for the decline in the economy s ability to generate good jobs. ’ further For 11 discussion, see Baker (2007), Bernstein and Baker (2003), Bivens (2011), Mishel, Bernstein, and Shierholz (2009), and Schmitt (2009).

18 CEPR  16 Where Have All the Good Jobs Gone? References , Dean. 2007. . Cambridge: Cambridge University Press. The United States Since 1980 Baker Jared and Dean Baker. Bernstein, 2003. The Benefits of Full Employment: When Markets Work for People . Economic Washington, DC: Institute. Policy Failur e by Design: The Story Behind America s Broken Economy . Washington, DC: Bivens, Josh. 2011. ’ Economic Policy Institute. State of Working America: 2008 - 2009 . Mishel, Lawrence, Jared Bernstein and Heidi Shierholz. 2009. Ithaca, NY : Cornell University Press. - John Schmitt. 2010 Health - Rho, Hye Jin and “ Insurance Coverage Rates for US Workers, 1979 2008. ” Washington, DC: Center for Economic and Policy Research. http://www.cepr.net/documents/publications/hc - coverage - 2010 - 03.pdf Schmitt, John. 2005. How Good is the Economy at Cr eating Good Jobs? ” Washington, DC: “ Center for Economic and Policy Research. http://www.cepr.net/documents/publications/labor_markets_2005_10.pdf ——— . 2007. “ The Good, the Bad, and the Ugly: Job Quality in the United States over the Three ess Cycles. ” Washington, DC: Center for Economic and Policy Research. Most Recent Busin http://www.cepr.net/documents/publications/goodjobscycles.pdf - . 2008. The Decline of Good Jobs, ” ——— vol. 51, no. 1 (January “ February 2008), pp. 5 - Challenge, 25. February 2008. ——— . 2009. “ Inequality as Policy: The United States since 1979. ” Washington, DC: Center fo r Economic and Policy Research. - http://www.cepr.net/documents/publications/inequality policy - 2009 - 10.pdf ——— . 2012. “ Health - insurance Coverage for Low - wage Workers, 197 9 - 2010 and Beyond. ” Washington, DC: Center for Economic and Policy Research. - low - http://www.cepr.net/documents/publications/health - 2012 - 02.pdf wage

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