Thu Dec 6th, 2007 at 04:28:55 AM EST
(This is the third part of a survey of US employment. The first was Where the jobless go..., the second,
How the jobs are counted...)
Stripping out student part-time jobs may seem like cherry-picking, but it is a reminder that any small job adds to the employment level, even one hour of paid work in the week referenced in the survey. An economy that creates a lot of short-hour part-time employment will look a lot better in the labour stats than one that doesn't. So, the Netherlands, with 45 % part-time jobs in total employment 15-64 (Eurostat), has been considered a "miracle" economy. No doubt there are employees happy with part-time work, but in general it fits with the flexibility sought for by employers.
At least, it's the type of flexibility chosen when the employer must pay a minimum wage, plus social contributions. Another type of flexibility (one many employers would no doubt find preferable) is to have people work full time at low hourly rates. It's been said (and denied) that the US employment numbers look good thanks to "Macjobs" -- low-paid waitressing and burger-flipping. In fact low hourly rates are more prevalent in the US economy than that narrow "Macjob" frame suggests.
The US has a federal minimum wage : $5.15 per hour. The US Bureau of Labor Statistics gives an annual count of jobs that are paid at and under this low hourly rate. They mostly concern young, particularly female, workers in part-time employment, but in the aggregate they amount to nearly 2 million jobs. (Note that these jobs can't be added to the student part-time jobs counted in How the jobs are counted..., since there's probably a considerable overlap between the two).
And this rate, that is not even fully applied across the country, is low and rarely updated. In PPP with the euro in France that is €4.95, or with the pound in Britain £3.60. (Current minimum wages in these two countries are €8.44 and £5.52, though the UK applies lower rates, £3.40 for 16-17, and £4.60 for 18-21-year-olds.)
Of course this is debatable. A low minimum incites employers to give teenagers jobs. But
- isn't this just a handy way of obtaining better employment numbers with crappy little jobs?
- this is race-to-the-bottom logic: why bother with a minimum wage at all? Leave it to the market; and let the poorest and weakest compete for lower and lower pay.
|Hourly Earnings from the BLS|
The US Bureau of Labor Statistics annually compiles estimates of hourly pay (Occupational Employment Statistics) for all occupations across all industries (farming and self-employed not included). The 2006 data published this year are available in a large .xls file. The job count of 133 million covers some 800 occupations across these 20 sectors of activity:
11 Logging (1133), support activities for crop production (1151), and support activities for animal production (1152) only.
42 Wholesale trade
44-45 Retail trade
48-49 Transportation and warehousing
52 Finance and insuarance
53 Real estate and rental and leasing
54 Professional, scientific, and technical services
55 Management of companies and enterprises
56 Administrative and support and waste management and remediation services
61 Educational services
62 Healthcare and social assistance
71 Arts, entertainment, and recreation
72 Accomodation and food services
81 Other Services (except Federal, State, and Local Government)
99 Federal, State, and Local Government (OES designation)
The interest of these extremely detailed data lies, not in the calculation of a mean hourly rate (and a theoretical annual salary) for each occupation, but in the supply of the tenth, twenty-fifth, fiftieth, and seventy-fifth percentiles. That is, the upper limit of the first decile, or lowest-income 10%, then the first quartile (lowest 25%), the median (half the hourly rates below it, half above), and the third quartile (up to 75%). The percentiles allow us to look at income distribution, which the mean (average) does not.
The OES says this of the data:
Frequently Asked Questions
The OES program is the only comprehensive source of regularly produced occupational employment and wage rate information for the U.S. economy...
<...> These data inform the so-called "good-jobs/bad-jobs" debate on how business cycles and structural economic change impact wages and employment across the range of occupations; and how many and what types of jobs are impacted by off-shore outsourcing. <...>
The OES says in an accompanying file :
Wages for the OES survey are straight-time, gross pay, exclusive of premium pay.
What surprised me, browsing through the file, was the contrast between the mean hourly rates (fairly comfortable), and the skimpy look of the first decile in many instances, and even the quartile or median in some. Apparently one-tenth, or one-quarter, or even half the wage/salary earners in some occupations (even entire industries) were badly paid: above the federal minimum, but badly-paid all the same (those paid at or below the federal minimum would be "hidden" at the bottom of the first decile).
I wondered how many of these hourly rates would be legal in the UK or France. (Note to those who ask for more countries to be included in these comparisons: that's fine by me, but it's already a fair task taking three. Perhaps someone else will feel inspired to work on this, or we'll have to wait until I do... ;)). The data are from May 2006. The British minimum wage was then £5.05, in PPP $7.18. In France the SMIC (minimum wage) was €8.03, in PPP $8.35. It was clear that, applying the British minimum already, whole slices of hourly wages in the OES were beneath what a worker in the UK could expect. But the data don't come with age groups, and the UK having three age group definitions of the minimum wage, there was no way of reaching a clear-cut breakdown of the figures.
Comparison with French Minimum
Sorting the first decile on the basis of $8.35, out come immediately eight industries that pay less than that to the lowest-paid 10% of all their workers across the board :
- Agriculture, Forestry, Fishing, and Hunting (but see above for limits)
- Retail Trade
- Real Estate and Rental and Leasing
- Administrative and Support and Waste Management and Remediation Services
- Health Care and Social Assistance
- Arts, Entertainment, and Recreation
- Accommodation and Food Service
- Other Services (except Public Administration)
Of these, Agriculture (note again that actual farm workers, a group one would expect to be low-paid except for the very highly-skilled, are not included), the Retail Trade, Arts, Entertainment, and Recreation (!), and Accommodation and Food Service (less surprising), show the entire first quartile beneath $8.35. And you need to get past the median in Accommodation and Food Services to get paid at or above the level of the French minimum wage. That is, (since the median is at $8.00 and the 75th percentile only at $10.37), maybe 55% to 60% of the 11 million workers in that sector don't get paid the minimum for France. Here's the count of workers paid less than $8.35 in those eight industries (note that these levels are an understatement of the reality, since in many cases the $8.35 limit may be situated anywhere between the 10th and the 25th percentile or even beyond the 50th, as we have seen) :
|Agriculture etc||94 923|
|Retail Trade||3 879 070|
|Real Estate||214 870|
|Administrative and Support||835 018|
|Health Care and Social||1 558 667|
|Arts, Entertainment||466 733|
|Accommodation and Food||5 524 500|
|Other Services||383 310|
|Subtotal||12 957 090|
After this, in the other industries, it's down to an occupation-by-occupation count within each sector. It should be noted that each industry has its specific service employees, such as waitresses, cleaners, child care personnel, grounds maintenance workers, drivers, etc, and not surprisingly they figure among the low-paid. Here is the breakdown of numbers of employees paid under $8.35 in the twelve other industries :
|Fed State Local admin||260 368|
|Educational services||472 955|
|Prof, Sci, Tech services||154 714|
|Subtotal||2 410 402|
This brings us to a total of:
|Eight industries||12 957 090|
|Twelve industries|| 2 410 402|
|Total||15 367 492|
In percentage terms, that's 11.5 % of the 133 million wage/salary earners in the survey.
Once again, there are numbers missing because they are not surveyed (farm workers) or because they are hidden in the lower reaches of the next decile or quartile up. So, at the least, 11.5% of American wage/salaried workers are paid less than the French minimum hourly rate.
|What Does It Mean? And What Does It Matter?|
This is an arbitrary line drawn from outside across American wage statistics. Certainly, but American financial capitalism and its theorist-soldiers have been drawing arbitrary lines all over other nations' economies for years now, so this is just a tiny little get-your-own-back attempt. OK, but it's not meaningful! Well, one thing it does is show that you really shouldn't compare apples with oranges. French employment isn't the same fruit as American employment. Who cares? What people want is jobs, you elitist shit! Do they? They want jobs that force them to work long hours all year round just to keep their head above water, and maybe not even that?
The OES data offer a mean annual salary for each occupation (and each industry). It doesn't look so bad. For instance, in the Accommodation and Food Services industry, the mean annual salary indicated is $19, 650. Not much, but almost double the federal poverty threshold for one person in 2006, $10, 294. (That's an absolute level, linked to the CPI and not to the general standard of living in the country, and it's for one unrelated person only).
But the mean annual salary in the OES data is derived from the mean hourly rate, which, in the case of the occupations with low rates at the bottom of the distribution, is closer to the 75th percentile than to the median, meaning that the very best hourly rates at the top of the distribution pull the mean upwards. In Accommodation and Food Services, where the median is $8.00, the mean is $9.45, the 75th percentile $10.37. And the mean annual salary is obtained by multiplying the hourly mean rate by 2,080 annual hours. If you're in the bottom half of the distribution, the best you can hope for in annual salary is $16, 640; in the bottom quarter, $14, 144; in the bottom 10%, $12, 521.
That is, if you work 40 hours a week 52 weeks a year (40 x 52 = 2, 080).
That annual mean salary calculation is a fiction, of course. People earning these low hourly rates are probably working whatever hours they can get, which may mean more than 2, 080 a year. It may mean working more than one job (the BLS counts 7.5 million persons running two jobs or more). Or it may mean not getting the hours and being one of the 7 to 8 million working poor.
And this is not limited to waitresses and burger-flippers. The OES data show it concerns many different occupations and sectors of activity, right across the board. Fifteen and a half million workers at the minimum, to judge by the crude arbitrary line I drew.
But whether people really want jobs in these conditions or are simply forced to take them isn't really within my focus. I'm trying to examine what's in the "full employment economy" tag of countries like the UK and the US. What's in the way the statistics are constructed, and finally, what's in the employment. The statisticians are no doubt rigorous and honest, but the concepts and rules they work with produce indicators that are insufficiently informative or misleading, and that are distorted by social developments politicians studiously ignore, at least insofar as they impact the main indicators. As to what counts as good-number-boosting "employment", the very low pay in the bottom deciles we've seen evidence of here makes me think that, if this is what's meant by creating jobs, any fool can do it.
In Where the jobless go... I looked at distortion of the US unemployment rate by
- high sickness/disability numbers
- high military/prison population
My conclusion was that these accounted for several points (hard to evaluate) missing from the unemployment rate.
In How the jobs are counted... I looked rather at the employment rate, more and more often used as a more solid indicator than the unemployment rate. This indicator too is open to distortion in the marginal young and old groups. Later retirement in the US tends to support the employment rate, earlier retirement in the UK and above all France, reduces it. Special early retirement schemes hide unemployment among the over-55s in France.
Youth figures are very considerably distorted by the cultural habit (or economic necessity) of student part-time jobs.
In this diary, I looked at hourly rates of pay in the US, finding that a large percentage of wage-earners are paid less than mandatory levels in other countries (UK and France again), and indeed at levels that cannot fairly be thought consonant with "earning one's living".
We have already concluded here at ET that comparisons between countries, based on the unemployment or the employment rate, are unlikely to be rigorous or useful. As for using the US employment situation as an object lesson for other countries that are told to consider the American model as the best and only way : the distance is great between the hype and the reality.
|Previous Labour Market Diaries|
What's really wrong with the Eurozone labour market? by Colman June 2005
The Party line by Jerome a Paris Aug 2005
Comparing unemployment statistics by Colman Sep 2005
OECD says ET was right about UK unemployment by afew Oct 2005
European Unemployment by TGeraghty Nov 2005
Youth unemployment by Jerome a Paris Jan 2006
Graphic statistics by Alexandra in WMass Jan 2006
More employment statistics by Jerome a Paris Jan 2006
The Inverted Example of Spinning Jobless Statistics by DoDo Feb 2006
Actual facts about the French labor market by Jerome a Paris March 2006
European Employment: Some Good News by TGeraghty Sep 2006
What's unemployment, again? by Jerome a Paris Jan 2007
Fascinating employment and unemployment numbers by Jerome a Paris Feb 2007
CS Monitor: stats are only good when they suit us by nicta March 2007
Soundbite Statistics : the Unemployment Rate by afew June 2007