The U.S. economy is besting expectations for job growth, and the unemployment rate is at its lowest in several decades — but the other side of the story is that millions of jobs out there just aren't good enough.
Why it matters: Almost half of all American workers are stuck in low-wage jobs that often don't pay enough to support their lives, lack benefits and sit squarely inside the automation bullseye.
By the numbers:
- There are 53 million U.S. workers — around 44% of the total workforce — who work in jobs with a median hourly wage of $10.22 and median yearly earnings of $18,000, according to a November Brookings study that examines low-wage work.
- Around a quarter of low-wage workers are the only earners in their households.
"The storyline from the jobs reports is the result of looking at an incomplete set of measures," says Martha Ross, co-author of the Brookings report. "We do have to look at the quality of the jobs we are creating."
The big picture: For decades, the job market has seen steady polarization, Jed Kolko, chief economist at Indeed, says. There's been growth in high-wage jobs in tech and finance in big cities, and there's been a similar surge in jobs at the lower end — but the middle has hollowed out, primarily due to the collapse of manufacturing.
- The labor market is tightening, which ought to push wages up, but that's not necessarily happening, says Kolko. While pay for low-wage jobs has been increasing in the last couple of years, that growth is not keeping up with inflation or the rise in housing costs.
- On top of that, millions of low-wage jobs — such as in retail, food service, home health care or the gig economy — don't have robust benefits packages (if any) and don't have predictable schedules. "All of this is part of what makes a job a good job," he says. "The wage growth for lower-wage industries is encouraging, but there’s lots to worry about."
Low-wage work is more pervasive in parts of the country that have been left behind by the winner-take-all cities on the coasts, Brookings found.
- And there are a number of cities where low-wage occupations make up the majority of jobs: Las Cruces, New Mexico, and Jacksonville, North Carolina (both 62%); Visalia, California (58%); Yuma, Arizona (57%); and McAllen, Texas (56%).
- This will be an increasingly important question for local leaders, says Ross. "What does it mean when almost two-thirds of the jobs in your region are low wage?"
Minorities are disproportionately impacted by low-wage work. Per the study, 54% of black workers and 66% of Hispanic workers are low wage, compared to 37% of white workers.
What to watch: Polarization in the job market is projected to get worse. At the same time, low-paying jobs in the retail and restaurant industries are among those with the highest automation potential. Says Ross: "The question of these low-wage jobs disappearing or changing means we have to think about how to support these workers. I think, as a country, we are terrible at doing that."