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."

Comments

Peninsula Pundit

There's a lot of pathetic on this board.
and as tango would say:
Off topic (snip)

KnuckleDragger

Look at the average wage for a Walmart employee, it is already higher than your messiah wants to raise minimum wage to. Lefties loath walmart, but walk in there on payday and you will see a store filled with people wearing their union local jackets. As for the answer to who ends up with all the money? Middle class people such as myself that have investments. Take a look at all the evil companies that your retirement plan has so that you can continue to live high off the hog courtesy of the taxpayer. If you don't dump all the stocks in your portfolio of companies who don't pay a living wage, you sir are nothing but a hypocrite.

coasterfan

I'm middle-class and have investments, too. I just also have something you don't have: empathy for people who are working/trying just as hard as you and me, who live in poverty. I don't loath WalMart. Also, I'm realistic with regards to my 401K. I know that I get a nice return, but also know that the investment companies and my Fidelity agent are taking a large chunk of the profit right out of my pocket. So, yes, most of the money - most of OUR money - gets funneled to the top.

So. If WalMart workers (who are on food stamps) are already making more than Obama proposes for minimum wage, why on earth are Republicans STILL dead set against raising the minimum wage? You do know, that if WalMart doesn't pay them enough for working fulltime, you/we/us gets to pay for the foodstamps they need, right?

Contango

Re: "to my 401K. I know that I get a nice return,"

How is that not greed?

KnuckleDragger

Like I said, he is a hypocrite. He has empathy but only in so far as someone else's money is being used to pay. If they told him tomorrow that they were cutting his pension in half in order to make things more equal for the poor, he would have a stroke. I'd love to see how much of HIS money goes to charity to help the poor. I'm bettin' not much, most liberals I know are the stingiest people I have met.

grumpy

Re: "Also, I'm realistic with regards to my 401K. I know that I get a nice return, but also know that the investment companies and my Fidelity agent are taking a large chunk of the profit right out of my pocket. So, yes, most of the money - most of OUR money - gets funneled to the top."

You invest in loaded funds and have an agent do your account? I could understand having an agent starting out and maybe if you trade individual stocks but to use an agent to do mutual funds? You're nuts if you invest in loaded funds, you can trade mutuals with no cost as long as you stay in the same mutual family( Fidelity same as most mutual fund families) it is your own fault. An hour a week is all you need to keep on top of mutual funds. It is your own laziness to pay someone to deal with mutual funds, especially loaded funds, when it takes little time, as I said I can understand it when you just start out but... Most of MY money doesn't get funneled to the top.

Contango

Fidelity is privately owned.

If it ever files for an IPO - I'm buying some.

Vanguard; investor owned, with some of the lowest mgmt. fees in the industry.

I'd use the terms: broker, investment advisor or registered representative, 'not' "agent."

Per usual, coaster allows his Marxist ideology to guide his thinking while remaining confidently ignorant.

Really are you ...

An IRA you pay taxes on it when you cash it in. On a Roth IRA you pay taxes on it as you put it in and pay no taxes when you cash it in. How about that Romney IRA, pay no taxes before or after. Here is the catch. It has to be in an offshore account with someone else managing it for you. So when asked about taxes paid on your invested money, you will have someone else to blame if there is a question about taxes.

Contango

Re: "Pay no taxes before or after,"

Not possible.

"an offshore account"

Mr. Romney declared any income.

See current and Pres. Obama's pick for Treasury Secy. Jack Lew. He had a Cayman Is. account.

http://www.washingtonpost.com/op...

KnuckleDragger

If most of his money gets funneled to the top his advisor is ripping him off and apparently it doesn't bother him.

Contango

coasterfan writes: "most of OUR money - gets funneled to the top."

And yet you foolishly continue to invest with them, why?

Do you enjoy being exploited?

KnuckleDragger

We both know it's because either he doesn't have enough sense to play an active role in his own investments or he is just too darn lazy. His financial advisor must of saw him coming. LOL

Darwin's choice

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

jacksonbrowne

I submit to coasterwhiff that you start your own business at which time you can pay as many of your employees a real living wage.

yeahme

Um...then get another job!

yeahme

First of all they would be in category of "largest employer who's employees are on food stamps" because they by far have more employees then anyone else..duh. they r above min. Wage. Are you saying because someone pops 5 kids they cant afford they should make 20 an hour to support their kids? Um..duh again. Its called stop popping kids if you cant afford them and stop living over your means! Simple.

KURTje

Agree. Winnie needs to run for office. He has all the answers.

Contango

Re: "Agree."

Are you burning wood? Whatsamatter, don't you care about global warming kookie? Selfish pdb. lol

The Big Dog's back

Once again contangonut moves the conversation towards what he wants to talk about.

Babo

The lack of steeping stone jobs is one reason the double dipping issue among government employees in Ohio should concern all of us.

Baby Boomer bureaucrats in schools, state, and local government positions who made a bunch of money during the boom years; retire and collect their taxpayer funded pensions. Instead of getting out of the way and allowing a younger person to be promoted and bring a fresh perspective to the organization; the public body rehires the "retired" man or woman.

Yes, it's only part (but pretty significant when one totals all government jobs) of the economy but it is bad policy in my opinion.

KURTje

Thanks for showing how ignorant you are. So glad you moved away.

Contango

Re: "ignorant,'

Yes you are you pdb. lol

SamAdams

Something not mentioned here but which is also worthy of note: Plenty of those who are "educated" and yet work in minimum wage jobs is because their education was focused on esoteric or just plain ridiculous "skills." Really, just how much demand IS there out there for someone with a degree in "Women's Studies?" In "Medieval French Literature?" And then you have those degree programs which are past their expiration date since the advent of computers and the software to let the average Joe manage on his own...

I'm betting that competent computer programmers, those who earned good grades in various engineering disciplines, nurses, etc. are finding jobs, while those seeking a college degree in "Liberal Arts" really ought to have a class required for graduation entitled "15 Ways to Ask 'Do You Want Fries With That?'"

Informed

So, unless your talents and interests lie in the sciences, you have no hope?
College isn't about gaining "skills", it's about becoming educated. Many companies used to hire college graduates regardless of their major because they wanted well-rounded, educated, bright employees. Now all they care about is paying someone as little as they can. They don't want to train employees anymore, they expect colleges to do that. And they get slave labor by having unpaid internships.

SamAdams

Re: So, unless your talents and interests lie in the sciences, you have no hope?

God, I hope not given the woeful state of science education in the public schools these days! Those were just the first things that came to mind. But possibilities NOT including heavy duty science might be becoming a lawyer or a teacher (pick your discipline here).

Not inclined to ANY kind of real academia? No problem! Be a chef. An auto mechanic. A welder. But you DO need some drive, and you DO need some education in whatever area it is that you choose. Many employers can no longer afford "on-the-job" training. So get some elsewhere!

Informed

I guess my point was there are many other areas that college students can major in besides the sciences, and there should be jobs in those areas. We need art and literature and music, etc. Those are the things that make up our humanity. We need people who write, we need historians, we need all different types of people in all different types of jobs to function at our highest level of society.

SamAdams

There aren't many jobs for the average guy in art, literature, and music unless you want to get into advertising (graphic design, copywriting, jingle writing, etc.). For the exceptionally talented, of course, there's always a way to be a painter, a novelist, a concert pianist, or a rock star. But that needs a lot more talent than it does a college degree!

Speaking of the arts: Why do we subsidize those? If you're not good enough to make a living at it, if nobody wants to buy it, then why should you get to do it for a GOVERNMENT paycheck? I like cats, but I don't try to earn a living breeding them! So what do I do? I HAVE a few cats, and I also have a real JOB. Listen up, sports fans: If you can't earn enough doing something to pay your bills, it's called a "hobby!" There's nothing at all wrong with that, but just because you happen to love it doesn't mean it's also your career. If you're lucky (and work hard and are talented), it CAN be, but you've got no right to EXPECT it, nor do you, Informed, have any right to DEMAND it!

The Big Dog's back

Round and round it goes, where the right wingnut mind stops nobody knows.

SamAdams

So, Big Dog, does that mean I can sit at home, watch my cats have kittens, and you'll support me while I do it? That's freaking AWESOME! Can I start tomorrow? (I'll expect my first check from you shortly...)

The Big Dog's back

Check's in the mail.

Pages