How Work is Changing in America

Matthew Klein:

In the past sixteen years, 94 per cent of the net jobs created were in education, healthcare, social assistance, bars, restaurants, and retail, even though those sectors only employed 36 per cent of America’s workforce at the start of the millennium. . . . Average hourly pay in these sectors, weighted by their relative sizes, has consistently been about 30 per cent lower than in the rest of the economy. And since typical jobs in bars, restaurants, and retail involve far fewer hours than normal, weekly pay packets for workers in these growing industries were more than 40 per cent lower than workers in the rest of the economy. Average weekly earnings are now 3 per cent lower than they would have been if the distribution of employment had stayed the same as in January, 2000

In the past, the economy has grown, and wages have grown  with it, because employment growth was concentrated in the most productive sectors of the economy. (Factories in the 1920s, IT in the 1990s.) Now most new jobs are in sectors where productivity is flat or declining, with the predictable result that wages are going nowhere. When you hear various glib theories about how to bring back high wage jobs (e.g., Trump's coal and steel plan, or various Democratic proposals for "green jobs") you have to remember that wages are stagnant because of some very fundamental, hard to change things.