Low-wage workers struggle to find middle-pay jobs

Many of the next-tier positions no longer exist, which helps widen the gap between the richest Americans and the rest of the country
Associated Press
Mar 13, 2014

For years, many Americans followed a simple career path: Land an entry-level job. Accept a modest wage. Gain skills. Leave eventually for a better-paying job.

The workers benefited, and so did lower-wage retailers such as Wal-Mart: When its staffers left for better-paying jobs, they could spend more at its stores. And the U.S. economy gained, too, because more consumer spending fueled growth.

Not so much anymore. Since the Great Recession began in 2007, that path has narrowed because many of the next-tier jobs no longer exist. That means more lower-wage workers have to stay put. The resulting bottleneck is helping widen a gap between the richest Americans and everyone else.

"Some people took those jobs because they were the only ones available and haven't been able to figure out how to move out of that," Bill Simon, CEO of Wal-Mart U.S., acknowledged in an interview with The Associated Press.

If Wal-Mart employees "can go to another company and another job and make more money and develop, they'll be better," Simon explained. "It'll be better for the economy. It'll be better for us as a business, to be quite honest, because they'll continue to advance in their economic life."

Yet for now, the lower-wage jobs once seen as stepping stones are increasingly being held for longer periods by older, better-educated, more experienced workers.

The trend extends well beyond Wal-Mart, the nation's largest employer, and is reverberating across the U.S. economy. It's partly why average inflation-adjusted income has declined 9 percent for the bottom 40 percent of households since 2007, even as the top 5 percent have fully recovered from the recession that began late that year, according to the Census Bureau.

Research shows that occupations that once helped elevate people from the minimum wage into the middle class have disappeared during the past three recessions dating to 1991.

One such category includes bookkeepers and executive secretaries, with average wages of $16.54 an hour, according to the Labor Department. Since the mid-1980s, the economy has shed these middle-income jobs — a trend that's become more pronounced with the recoveries that have followed each subsequent recession, according to research by Henry Siu, an economist at the University of British Columbia, and Duke University economist Nir Jaimovich.

That leaves many workers remaining in jobs as cashiers earning an average of $9.79 an hour, or in retail sales at roughly $10.50 — jobs that used to be entry points to higher-paying work. Hourly pay at Wal-Mart averages $8.90, according to the site Glassdoor.com. Since the Great Recession, the share of U.S workers employed by the retail and restaurant sector has risen from 16.5 percent to 17.1 percent.

"It really has contributed to this widening of inequality," Siu said.

The shift has injected new pressures into the economy. Older and better-educated retail and fast food workers have become more vocal in pressing for raises. Labor unions helped launch protests last year against such employers as Wal-Mart, McDonald's and Burger King.

Fewer teenagers are staffing cash registers, prepping meals or stocking shelves, according to government data. Replacing them are adults, many of whom are struggling with the burdens of college debt or child rearing. Some are on the verge of what was once envisioned as retirement years.

They are people like Richard Wilson, 27, in Chicago. More than 2½ years ago, a Wal-Mart store manager spotted Wilson cleaning the cafeteria at Liberty University in Lynchburg, Va.

A double major in biblical studies and business communications, Wilson had $3,000 in tuition due and had maxed out on student loans. He said the recruiter suggested that a management job could eventually be within reach for him because, "Wal-Mart is where people's dreams become a reality."

Wilson first worked at a Wal-Mart near college before returning to his Chicago hometown without a degree but with $50,000 in student debt and another job at a boutique Wal-Mart specializing in groceries.

Today, Wilson earns $9.45 an hour at that Wal-Mart and lives on the city's western edge with his grandmother. He boards a bus most mornings at 3:30 a.m. and arrives for his 5 a.m. shift in the more upscale neighborhood of Lakeview East. He has applied for promotions. So far, no success.

If he had the money for a ring and a wedding, Wilson said he would propose to his girlfriend.

Last year, 17.4 million Americans between ages 25 and 64 earned less than $10.10 an hour, the minimum wage proposed by President Barack Obama (The current federal minimum is $7.25.) That's equal to an income of nearly $19,000 for a full-time employee — less than half the median pay of a U.S. worker.

The share of Americans in their prime earning years who earn the equivalent of $10.10 an hour or less, adjusted for inflation, has risen to 13.4 percent from 10.4 percent in 1979, according to government data analyzed by John Schmitt, a senior economist at the progressive Center for Economic and Policy Research.

Nearly a third of low-wage employees last year had had some college education. An additional 10 percent had graduated. By contrast, in 1979 less than 25 percent of low-wage employees had college experience. Most had not completed high school. For millions of lower-wage workers, more schooling hasn't led to higher pay.

"Where you start out in terms of wages helps to predict where you move over time," Schmitt said.

That principle has become an alarming reality for many. Only 5.5 percent of people with jobs at the fast food chain Wendy's will earn more than $70,000 in today's dollars at that company, based on a review last year of 8 million resumes by the analytics firm Bright.com.

Just 8 percent of Home Depot employees will be so fortunate. For Macy's, 9.4 percent. By contrast, more than a quarter of Amazon staffers will exceed $70,000 a year. The ratio is even better for Verizon and AT&T workers. A majority of Ford employees will achieve that income at least once in their career. Just 10 percent of Wal-Mart workers will.

Wal-Mart promotes itself as a source of opportunity, and in some cases, that's proved true. Over 11 years, for example, Tonya Jones rose from staffing a checkout line to managing a section of a Wal-Mart supercenter in Hendersonville, Tenn. Jones, 41, said her pay exceeds $15 an hour — enough with scholarships, including one from Wal-Mart, to help put her daughter through college.

Asked whether she represents an average Wal-Mart worker, Jones said opportunities at the company boil down to personal choices.

"I want to be No. 1," she said. "I am very competitive."

That said, the data show why it's harder now for workers to rise into higher-paying fields despite an economic recovery now nearly 5 years old. About 1.9 million office and administrative support jobs were lost to the Great Recession, according to government data. That includes 714,370 executive secretaries with annual incomes averaging $50,220. And 252,240 fewer bookkeepers with average incomes of $36,640.

By comparison, the number of lower-wage jobs increased: The Labor Department says restaurants added 777,800 jobs since the recession began, general merchandise stores 345,600.

"You see adults moving into these relatively generic services (jobs) that don't require expertise, just dexterity, attention and showing up," said MIT economist David Autor. "You want people to be in jobs that have good trajectories. I can imagine you only get so efficient as a checkout clerk or a stocker."

Wal-Mart customer service manager Janet Sparks of Baker, La., trained as a bookkeeper. She owned a video rental store and worked for an accountant, a nuclear power plant, a McDonald's and a bank before joining Wal-Mart about eight years ago.

Sparks, 53, said Wal-Mart once offered a path to the middle class with merit raises of up to $2 an hour. The company ended those raises, while making more employees eligible for bonuses based on a store's overall performance. It also introduced what's called "optimal scheduling" to match employees with expected sales. It can mean that workers whose shift ended at 11 p.m. might have to begin their next shift at 7 a.m., Sparks said.

Sparks said the erratic schedule makes it hard for employees to earn additional income from a second job. She joined Wal-Mart in 2005 with the expectation that the since-cancelled merit pay raises would eventually let her clear $21 an hour. She instead received smaller raises and now earns $12.40.

Wal-Mart said it began to change its bonus system in 2006. It now pays bonuses of up to $2,500 to some employees based on their store's performance.

And it says its scheduling system considers the preferences and availability of employees and gives them three weeks' notice of their work calendars.

Other retailers have also adopted optimal scheduling. Starbucks was sued by a former employee over its system, according to Massachusetts court records. Starbucks said on its corporate site that the "goal" of optimal scheduling "was to provide the most working hours to those partners who were available to do so."

Retail industry executives argue that stronger economic growth would make it possible to pay higher wages. The economy grew just 1.9 percent last year, well below its post-World War II average of 3.2 percent.

"For generations of Americans, it was an entry-level wage that got you into a position in which you could gain skills and experience and then get connected to the workforce and move up," said Matthew Shay, CEO of the National Retail Federation. "The problem now is the economy is not growing rapidly enough to create those other opportunities."

Simon's suggestion that many Wal-Mart employees might be better off leaving for other jobs surprised Wal-Mart cashier Joanna Lopez. A 26-year-old single mother, she owns no car and lives with her church pastor near Fremont, Calif. She collects food stamps and receives insurance through California's version of Medicaid.

Lopez started at Wal-Mart as a temp in August 2011, after being unable to land a hospital job with her associate's degree. Her pay has risen from $8 an hour to $9.20, after she moved from part time to full time. The suggestion by a Wal-Mart executive that some employees might be staying too long offended her.

"To me, that's an utter humiliation," Lopez said. "How can you sit there and have management say that we should find other jobs because this place is 'no bueno?'"

Wal-Mart spokeswoman Katie Cody said that its employees have "endless opportunities for advancement" and that "management is not saying that people should find other jobs."

"But when the economy is doing well, people tend to move around more," Cody said. "If people were moving around more, that would be a better indicator that the economy is doing well, which is good for our customers, our associates and our business."



Plenty of jobs in china.
Let them eat rice cake!
Send them to china.
Better for tne shareholders.

Really are you ...

No frigging way! Nobody saw the division of classes coming. We have a rock solid middle class that pays taxes and supports government spending.


"The problem now is the economy is not growing rapidly enough to create those other opportunities."

The individual and business marginal federal income tax rate should be: 0%.

Government cannot create jobs and the U.S. is proving it through the use of a combination of high taxes and onerous regulations.

Why does U.S. industry expand overseas? More favorable taxes and fairer regulations.

Jobs in the West TX oil fields can pay $50K, $100K and more annually.

But few of the youth who b*tch and complain about a perceived lack of good paying jobs would be willing to go after them.


Because it's hard work.

Pterocarya frax...

Winnie says: "Government cannot create jobs and the U.S. is proving it through the use of a combination of high taxes and onerous regulations."

Kasich, along with his beloved JobsOhio, has proven this correct.

Winnie says: "Why does U.S. industry expand overseas? More favorable taxes and fairer regulations."

Wrong. They move production there for cheap labor.

Does it ever get tiring spewing the lies from your corporate puppetmasters about 0% taxation rates? It must pay really well.

From the Grave

I don't think it's even cheap labor, because employees are also consumers. I think that OSHA and the EPA have made it impossible to compete with China, where they don't care(for now).


Re: "They move production,"

Wrong: To be closer to foreign mkts.

Approx. 55% of consumer markets are outside the U.S.

Can't export everything, Sport. Our labor costs are uncompetitive in the developing countries.

Other than b*tchin', what's YOUR answer?


Are you kidding Winnie? Nobody bit-hes more than you!


Ah, yes. The old Republican Lie: all poor people are poor because they are lazy, and want to be poor. As if they can magically transport themselves and their families to Texas. They don't have enough money to feed their family today, don't own a car because they can't afford one, but somehow would magically transport themselves to Texas, where a magic apartment with 2 months rent/deposits would appear for them to live in.

The reality: for every lazy person scamming the system, there are many more who DO work fulltime and STILL need foodstamps to get by. And, of course, you're also ignoring the fact that there are 3 job openings for every unemployed American. Does anyone actually believe that if all the unemployed went to Texas, there would be a job for them? There are more than 3 million unemployed, so I'm calling B.S.

Why does U.S. industry expand overseas? Often because there are far fewer regulations overseas, and because labor is so cheap there. It costs money to properly dispose of toxic waste in America. You can pay Laotian workers 25 cents an hour to make tennis shoes.

Contango is just like Fox News. He tells half the story and pretends the other half doesn't exist.


Re: "transport themselves and their families to Texas."

I wrote: "youth."

Besides, have you ever heard of working and sending money back home?

Seems like the illegal Mexes were doin' a lot of that.

Yea, better to just b*tch and moan and wait for the socialist-progressives to legislate the Land of Cockaigne into existence. lol

Other than b*tchin' at me, what's YOUR answer?

Rhetorical question, 'cause I already know:



We already know his answer, let's put 'em all on the government dole and pay 'em to sit home, watch TV and stuff Cheetos in their mouth all day. The problem seems to be that non-skilled labor can't move up. The word non-skilled should give it away. There are jobs available above where they are at but they require training and education to achieve. With all the government programs available now to help these low wage workers find better opportunity, the only excuses for not being able to move up laziness, and let's face it some people just don't have what it takes to move up. I suppose we need to continue subsidizing them forever?

Peninsula Pundit

Well, you live up to your moniker here.
Things are always so black and white in your world.
You moan about govt programs, then promote them.
Again, the vast majority are people want to work, yet you say that anyone who doesn't have a job is lazy.
Day after day, post after post, the same old tired drivel.
What purpose does your posts serve?
They aren't comments, they aren't discussion, they're just the same ol',same ol'.
In other words,sadly, we already know what your answers are,as well.
And largely, that's your own fault.
The jack-in-the-box always plays the same tune, no matter how many times you twist the crank.

Darwin's choice

You must be talking of your brother coasterfan.


Maybe you should lay off the Boone's. Apparently you glossed over the part where I said they may not possess the appropriate skills to move up. Sadly the liberal mantra is to continue to throw other peoples money at the problem through welfare when the statistics show that since war on poverty began there is more poverty than ever. So keep up the babbling, instead of putting forth a new idea attack someone for making a comment. Fact is you are no different than coasternut, you want to keep putting forth the same tired ideas that haven't worked in decades, hoping that they may actually work now. Oh Boy, you are too much.

Peninsula Pundit

No fair. I was the one who posted you and your buddy here are the ones putting out the same old,same old. Your reply? 'You, too!'
'throw other peoples money' etc
Just keep turning that crank, maybe the box will play a different tune.
Face it, what you guys consider your 'considered thoughts' are nothing more than regurgitations of comments you hear on TV and radio.


Uh... I think my point was that YOU are the one doing the b*tching and moaning.

My answer is to support the jobs initiatives that Obama has proposed for the past 5 years. Unfortunately, Republicans can't see past their hatred of Obama to actually vote in favor of anything that would create jobs. And they also continually vote to reduce funding to help the poor, while voting against minimum wage increases.

My answer is to encourage people to vote Democrat, since they are the only party that actually DOES something to help the poor and middle class.


Obamas job initiatives involve paying people with tax dollars. So, just exactly how does this help? Those tax dollars were already allocated for something else. So the gov't must either raise taxes or borrow more from China, Japan, Germany etc. Either way it is a dud.

Also, I don't think most people have a problem with people receiving food stamps and gov't assistance if they are working full time and just need a little help.


Re: "My answer is to support the jobs initiatives that Obama has proposed for the past 5 years."

Let's go back to the old, tired govt. make-work programs of FDR? :)

Remember what Pres. Obama said after $1T:

"Sh..shovel-ready was not as...ah...shovel-ready as we expected."

Yea, let's borrow, print, tax and spend some more and increase the fed debt. lol

Really are you ...

Well since the upper level government seems to think we are brain dead. The US citizen can not think, so let's tell the citizen what is good for them. How well are those highly educated officials doing? The highly educated government official textbook quality answers are running this country into the ground. Making rules and regulations to fix the poorly made rules and regulations from years past. It is like lying to cover up a previous lie. It is only going to get worse. The government needs to get rid of what isn't and keep what is in the best interest of The United States. I will say again "the best interest of the United States," not some congressman personal agenda. The United States includes every US citizen, so our best interests also.

One problem at a time. This device I am working on will give big oil and NERC real competition. Gasoline and diesel will not remain the main source of moving our automobiles. NERC won't have to drop the ball on which type of grid is the best, effecient or effective. For however they place the price per gallon at the pump, and future electrical prices will be put in check.

What is the difference with the beginning of the Preamble to the United States Constitution and what I want to do? "We the People of the United States of America," to "Power to the People." Will it level the playing field?


If this big device you speak of is all you say it is there would be venture capitalists falling over themselves to give you money. Instead you complain that government entities won't throw seed money at you. A simple google search will give you the names of these venture capitalists. Pitch your idea to them. If you have and they haven't given you any seed money then either they don't think your invention will be profitable, or you weren't able to get your idea across to them in a manner that would convince them you are worth the risk.


Excellent advice!

Really are you ...

With a VC firm they will have control of my company, limited control but still will have some control. Then they will want it on the stock market, I will have no say, and off to China, maybe Mexico, goes the new business I once created.


Ug!! Seriously tired of the Wal-Mart bashing!! They start out more than the other retailers!!!!! If you want more then min. Wage then earn it!!!! Have good work ethics, SHOW UP FOR WORK, get an education!!!!!!!! Any of those things will help people earn more. Pay all depends on your skill level. There are people that work there that make over 20 an hour...because they work hard developed skills and are dependable!!!!! Ug!


WalMart: the largest employer of Ohioans who are also on food stamps. These are people who work fulltime, but pay is so low that they need government assistance to get by.

WalMart: the top 6 heirs of the family business earn as much as the bottom 42% of Americans.

Fact: Since 1980, worker productivity in America has increased 90%, but wages have only increased 8%. Guess who ends up with all the money?


Re: increased worker productivity

Ya think that maybe automation may have had 'sumpthin' to do with that?

Who pays for the machinery?

"Money"? Where are your retirement assets invested?

Peninsula Pundit

Off topic (snip)


Coasterfan wrote:

"Fact: Since 1980, worker productivity in America has increased 90%,"

Better inform him.

Darwin's choice

Coastertroll, you're pathetic.

Guess that travel agent job must really be working well for you!

How's that obamacare failure today? Obama himself shutting it down?

Why no headline news about the failure?


I'm guessing the reason there is no headline news about an Obamacare failure is because it's not failing. Signup started poorly, but has greatly improved. 940,000 Americans signed up in February, and signup continues to grow and improve each month.

Only in the alternate reality of Republicanism would "improvement" be called a failure.

Darwin's choice

Still full of crap.

Post some proof of your BS lies! I dare you again failure!

Darwin's choice

"Please also provide scientific evidence and/or results from research studies that support your viewpoint."