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Lower wages, loss of benefits a struggle
January 30, 2004
For struggling workers like Keith Burnham, it's not just the quantity of jobs that aren't there -- it's the quality of those that are.
And so far in this economic recovery, the new ones sure don't pay like the old ones.
After 28 years making tools, Vietnam veteran Burnham now sews boat chairs in his Sterling Heights garage for half of the pay and no benefits. He sees jobs out there that pay $10 an hour, but says: "I'm not a kid. I've got a family. I can't live on that."
His is not an isolated example.
While politicians and news media reports have focused on the numbers of jobs lost and gained in this postrecession U.S. recovery -- there has been a net loss of 2.3 million jobs since 2001 -- very little has been said about the disparity in pay between jobs lost and jobs gained.
But combine the loss of jobs with the often reduced quality of new jobs, and it's likely this trend will become an issue between now and the November election. It also will be an issue in the run up to Michigan's Democratic caucuses Feb. 7.
President George W. Bush will point to a rising stock market and strong gross domestic product growth, economists say. But, they say, Democrats will hammer him on not only lagging job growth, but the fact that those jobs that do exist are for fewer hours at lesser wages and lower benefits.
A national study says the new jobs being created pay about 21 percent less than the jobs they replace. In Michigan, growing industries like health care pay 26 percent less than those like the auto industry that are losing jobs, said the Democratic-leaning Economic Policy Institute, based in Washington, D.C. And experts say those growing industries have lesser benefits and pensions.
Another concern: More people are working part-time involuntarily because they want a full-time job but can't find one. Part-time means working 34 hours or fewer a week, and part-time jobs don't typically offer health care benefits. In December, there were 4.79 million involuntary part-timers, compared with 3.25 million in December 2000, federal labor statistics show. That's the most since June 1994.
From manufacture to service
Economists say these numbers reflect a U.S. economy that is changing -- shifting from a manufacturing economy where people make cars or furniture to a so-called service economy with more people working in health care or hospitality jobs. Invariably, those jobs pay less.
"Some jobs are being created in education, health care services or hospitality, but they pay less, have poor benefits, and they certainly don't pay pensions like the old jobs did," said Jeff Chapman, economic analyst with the Economic Policy Institute.
This isn't the first time the U.S. economy has lost jobs in one industry and gained them elsewhere. From 1870 through 1920, tens of thousands of farming jobs vanished, and workers eventually found work in the auto industry or other fields. But many of the new factory jobs paid better than those farming jobs they replaced.
Now, the new jobs pay about $35,410 a year, compared with $44,570 at the old jobs.
The transition is painful for workers whose jobs are lost and who don't have skills for the new ones, Federal Reserve Chairman Alan Greenspan said this week to a London economic conference.
"We can be confident that new jobs will displace old ones as they always have, but not without a high degree of pain for those caught in the job-losing segment of America's massive job-turnover process," Greenspan said.
There are many such "caught" workers in Michigan, where 365,000 more people are looking for work today than in early 2001.
'This and that to make it'
After 28 years of virtually the same job -- designing tools used by manufacturers -- 54-year-old Burnham has tried several occupations since he was laid off in 2000.
Burnham also went back to school at Macomb Community College and got an associate's degree, hoping that would help him find a job making tools, where he used to earn about $30 an hour, or about $60,000 a year.
"I thought I'd update my computer skills and get back to work. That didn't happen. I think I picked a bad career," he said.
Burnham is getting by repairing boat upholstery. He spent $1,200 this summer for sewing machines and has some work that pays $14-$16 an hour for the weeks he's working.
As a veteran, he gets benefits -- but his wife doesn't. The couple also have five grandkids living with them.
"I think there are a lot of people like me out there. Older folks doing this and that to make it," Burnham said.
Stakes in presidential race
Workers like Burnham, caught in the economic shift, likely will be a key voice during the 2004 presidential race. They say they understand times are changing, but wonder if politicians and government can do anything about it.
In many ways, voters say their views on whether the federal government can do something about the loss of quality jobs may determine how they'll vote.
Those who think the situation is beyond the government's control say they're likely to give Bush a pass on the issue. Those who think the government can protect jobs or better train workers for new ones say they might be inclined to back the Democratic candidate.
"I've been a Republican most of my life, but Bush has fallen from grace on the domestic front," said Joe Tomlinson, a 46-year-old Battle Creek resident. He is trying his hand at selling homes after losing his 14-year engineering job at a cereal plant.
He hopes to earn the same salary in his new job, but he will have no benefits. Tomlinson expects to spend $12,000 a year on health care for his wife and two sons.
"I think the government can be more aggressive to protect jobs, promote manufacturing or use tariffs to stop imports that undercut companies over here," he said.
Low pay, low availability
Many unemployed workers, realizing the new jobs pay less, have lowered their expectations. Even then, jobs aren't plentiful.
"I've been looking since March and am willing to take a step back or two in pay, but I'm not finding anything on the Web, in the newspapers, anywhere," said Cheryl Dreger, a Washington Township resident laid off from General Motors Corp. after 14 years in administrative support. She made about $45,000. She'll take a lot less now.
"I'd take $30,000. Heck I'd take a part-time job. Believe me, I have a lot of guilt that my husband has to shoulder all the burden," said Dreger, a lifelong Republican who says she doesn't blame the economy on Bush.
Another change depressing new-job wages is that most new positions are being created by smaller companies as jobs are shed by larger ones.
A prime example in Michigan is in the auto industry, where GM is shedding hourly and salaried jobs. This year, GM plans to cut up to 3,000 of its white-collar workforce through attrition and retirements. GM had cut about 16,000 white-collar jobs the previous three years by buyouts, attrition and elimination of contractors.
The duties of those who aren't replaced at GM will fall to other GM workers -- or farmed out to smaller GM suppliers.
"The smaller companies are doing the hiring, and they tend to pay less than larger ones," said Donald Grimes, a University of Michigan industrial relations analyst. "That's a huge shift."