Not long ago, we worried a lot about the lack of jobs. We talked about rising unemployment rates and worried about students graduating into an economy that had absolutely no jobs to offer. We saw individuals with years of work experience and advanced degrees getting laid off, struggling to find any work.
The problem we seem to be facing now is similar–still troublesome, still limiting. Now we’re left wondering where exactly the wages are. We’ve got the jobs–the labor market is approaching full employment–but wages remain the same. Logically, an increase in the number of jobs should put more pressure on wages, which would then rise. The unemployment rate is below six percent, which is a huge improvement. Unfortunately, earnings growth is nonexistent.It’s a strange occurrence, leading many to question why exactly that’s happening.
When employment studies come out, they’re spread across an entire population. They mean that “overall” employment rates are higher. So what happens if people are getting jobs in one place? It alters the overall statistics. The same is true of wages–while they may be increasing in areas where jobs are growing, they aren’t increasing everywhere. Thus, the numbers are distorted.
There are also a few industries that are experiencing wage growth, but it isn’t universal. While mining and energy are boasting more jobs and higher wages, retail and food service workers have experience little to no wage growth–and they represent a much larger portion of the labor market. There are a lot of jobs being added to industries that lack wage growth, which causes the overall numbers to be down. Jobs in goods-producing industries have grown significantly since the recession, but jobs in service producing industries (the lowest wages and slowests to grow) are also growing.
Discouraged and Part Time Workers
Unemployment statistics obviously don’t account for everything, which makes it hard to get a real grasp on what is actually going on. It leaves us with a class of invisible unemployed people–discouraged and part time workers who desire more hours. Technically, they’re employed, though they likely aren’t working the number of hours they’re hoping to. They’re also potentially working at jobs that are well below their skill and experience level.
The official unemployment rate is around 5.8 percent excludes these folks who are still not making ends meet with their part time hours. In reality, the number of unemployed Americans has declined twice as quickly as the number of discouraged and part time workers. If we break it down, the difference becomes even more clear. In 2002, official unemployment accurately reflected what was happening in the labor force, with numbers far higher than more “invisible” types of unemployment. Since, the spread has lessened. Essentially, unemployment rates are not at all accurate representations of the actual condition of the labor force in America.
It’s also important to note that the workforce is aging–which leads to a difference in visible and invisible employment rates.
A shift in the workforce
Recently, there’s been an increase in work completed by companies in America by workers who are not American. An emphasis on heavy production for low labor costs have changed the way many companies do business. They’ve led to an increase in productivity and a higher profit margin–but they aren’t good for American businesses.
Expansion and hiring abroad have controlled labor costs within the United States and have greatly benefited investors–but wages are not growing.
What it means
Unfortunately, there are stories all across the United States that echo these findings–people earning low wages who are technically employed but whose salaries have failed to keep up with the rising cost of living. Healthcare is more expensive than ever–double what it cost a family only a decade ago. Gas is twice as much today, and higher education has risen from around $7,000 to approximately $17,000. And it’s leading Americans into debt. To be more specific, around $15,000 on the credit card and approximately $32,000 in student loans.
So what do we do to compensate?
If wages fail to expand (no matter the reason) many people are going to struggle because nothing else is getting significantly less expensive. Attempting to make ends meet can be difficult in a flourishing economy and becomes nothing short of a struggle in the aftermath of a recession.
As a member of the workforce, you’ve got a couple different options–and some are easier than others.
Pick up a part time job
A lot of young people are picking up a nontraditional part time job–think writing, photography, social media management. These jobs allow flexibility of schedule, involve some creative thinking, and allow a person to work from home.
These types of positions can be great for supplementing income if you’re struggling–and they can open the door to other things.
One of the “other” things they make way for are investments, which is what Jason Hartman recommends. While it is never a good idea to gamble your money with risky investments (like stocks), there are other, more permanent, forms of investments that can supplement your income considerably. With the money you make from a temporary extra job, invest in something that isn’t going anywhere. Everyone needs a place to live, so real estate is generally a low risk form of investment. But don’t buy for yourself–consider your investment an income property and find a way to make your money work for you.
Your tenants will pay mortgage and you’ll collect some extra money on top of that. Your investment will make more of the money you’re earning, no matter your wage. While the economy often fluctuates, people will always need a safe, comfortable place to live.
It can be difficult and ultimately frustrating to read the job reports, especially if you’re employed part time and struggle to find full time work. Unfortunately, these types of reports don’t reflect the often devastating reality of unemployment and partial employment. While you may have to work harder for awhile and things may seem grim, keep your chin up–you’ll get through this and be on your way to creating a future of wealth and prosperity.