REALITY OF THE FAST-FOOD WAGE DEMONSTRATIONS

…Today’s wage demonstrations at McDonalds

If you are wondering whether all those groups that for months have been demonstrating around the country for increasing their wages at the fast-food restaurants, are they finally being successful?   Well perhaps for all their efforts, in the future it will most likely be better for them.  But to understand why this effort against McDonalds and other low wage jobs has gone so viral, you would need to understand what the wage reality has been since the Great Recession of 2008?

The Economic Policy Institute (EPI) research group has examined just what has been occurring with wage categories since the recession and basically from 2008 to now, for low wage workers, not much has changed.

If you just listen to the main-stream media, you would think that the only kind of jobs that were being created were in fast-food restaurants and retail chains.  But as it turns out, this is wildly misleading.  The economy’s employment profile; that being the split between high and low-paying jobs, that hasn’t appeared to change much since 2000.  But those appearances can be a bit deceiving.

The EPI did their study by breaking down the nation’s businesses into three groups by pay scales. Today’s overall average hourly pay is ~$25.

 

The low-paying employment is dominated by restaurant and hotel jobs (2015 average hourly rate: $14.12) and retail jobs ($17.21). Mid-level jobs include manufacturing ($23.90), health care and education ($24.97) and construction ($26.91). Finally, high-paying jobs included professional and business services ($29.59), finance ($31.10) and utilities ($36.02).

The table below highlights the results. It shows how US jobs were distributed in 2000, 2007 and in 2015

Share of Jobs by %, Per EPI

          Low-Pay         Mid-Pay     High-Pay

2000   24%             43.9%           31.7%

2007   25%             43.3%           31.6%

2015   25.7%           42.7%           31.7%

Beware that even though this shows little difference in the category’s percentages, it doesn’t show that the overall number of jobs has increased.  And for 15 years, they were apparently being distributed fairly evenly between these three categories.

This does explain why the idea finally went viral for the low-paid worker’s wanting to feel a change.  But it doesn’t show how that gap between those in the American middle class and those in poverty has gotten so large since the latest turn of the century.

If you just consider how much the annual cost inflation occurs every year, for there not being any real changes in these wage group percentages since 2000, that means that even though our population has increased, the same percentage of Americans working in all the categories hasn’t changed for 15 years. 

 

But what it’s not telling you is that most likely, the same people that were in low paying jobs in 2000, are probably still in a low paying job today.

So, how do the nation's economists look at this situation. 

 

Many economists feel that weak overall wage growth of about 2% annually reflects a large influx of poorly paid workers whose low wages continue to bring down the average wage. 

 

But other economists disagree and think the weakness in wage growth is not driven by the lack of jobs being created, but rather by excess of labor or “labor market slack”.  This is what justifies the continued expansionary policies for adding more low-paying jobs.  But it also intensifies the pressure for higher wages.  Thus we see the reason for the continued public demonstrations asking for higher wages for low-paying jobs.

 

But there are other issues besides the wage groups.

What all of this doesn’t show you is that how you “define” the jobs and this is where things have seriously changed.

There have actually been a lot of new and better paying jobs added in the US.  They just haven’t been added to the low-end area.  This is where there's been no real recovery in that low-wage area.

The reason is, when the economy was regaining the jobs lost to the great recession, restaurants were the main job engine, and low-paying jobs were stated as dominating the recovery. From early 2010, when the employment decline was at the greatest point, to the middle of 2014, that’s when most of those lost jobs had been recovered. 

But it was also during that period that the “leisure and hospitality” sector added 1.67 million jobs.  That in itself showed a recouping of almost one-fifth of all the previously lost jobs.  This is according to an analysis by the Bureau of Labor Statistics (BLS).  In that same period, “educational and health services,” with much higher wages, that group also added 1.67 million jobs.  Finally, in the “professional and business services” area, i.e.: consultants, accountants, lawyers, with even higher wages, they added a whopping, 2.6 million jobs.

So, the reality is that these low-paid McDonald’s workers are now doing exactly what is needed for helping their cause.

It is only in the low-paying job category that there has not seriously been any recovery and it’s time for a change for those workers.

Copyright G.Ater  2015