Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

A Very Exclusive Recovery

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

A Very Exclusive Recovery

Article excerpt

Why is this recovery different from all other recoveries?

Many of the reasons are widely known: Rebounding from a financial crisis takes an excruciatingly long time; the huge decline in housing values has reduced Americans' purchasing power; large corporations are making do with fewer employees -- at least, in this country.

But what really sets the current recovery apart from all its predecessors is this: Almost three years after economic growth resumed, the real value of Americans' paychecks is stubbornly still shrinking. According to Friday's Bloomberg Briefing, "the pace of income gains is well below that of the past two jobless recoveries and real average hourly earnings continue to decline."

The Bloomberg report cites one reason for this anomaly: Most of the jobs being created are in low-wage sectors. According to Bloomberg, fully 70 percent of all job gains in the past six months were concentrated in restaurants and hotels, health care and home health care, retail trade, and temporary employment agencies. These four sectors employ just 29 percent of the country's workforce but account for the vast majority of the jobs being created.

Among the economy's better-paying sectors, construction still has an unemployment rate of 17 percent. Given the persistence of mass foreclosures, the continuing decline of housing values and Republicans officeholders' reluctance to allot public funds even for paving roads, construction isn't coming back anytime soon.

Hiring has picked up in manufacturing, but manufacturing wages are falling nonetheless. The standard wage at Midwestern auto factories has declined from around $28 an hour to $15 an hour for workers hired during the past two years. New hires have their hourly wages contractually capped around $19, no matter how long they may work for the automakers. But the plunge in wages hasn't stopped at $15. At a new high-tech locomotive plant in Muncie, Ind., Caterpillar is hiring workers at $12 an hour. That's $24,000 a year to assemble some of the most sophisticated machinery that this country builds.

So, if not to workers, where's the money going? Of the companies that comprise the Standard and Poor's 500, net income (chiefly, their profits) has risen 23 percent since 2007, the Wall Street Journal reported this week. …

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