Low-Wage Jobs Unexpectedly A Way Of Life For Many

Including older, better-educated, more experienced workers

Wal-Mart Dominates U.S. Retail Economy
APA cashier works at the checkout counter of a Wal-Mart Supercenter.


By Josh Boak

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 late 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 incomes for the top 5 percent now slightly exceed where they were when the recession began late that year, according to the Census Bureau.

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Secretary.
Getty ImagesOffice secretary.
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. (Wal-Mart disputes that figure; it says its pay for hourly workers averages $11.83.)

Since the Great Recession began, 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."

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Fast Food Workers Strike for Higher Wages
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.

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Obama's Minimum Wage Message: 'Say Yes. Give America A Raise'
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.

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Barista Tips
Getty ImagesStarbucks employees watch their manager make a shot of espresso.
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."

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What It's Like To Be... A Walmart Greeter
Video by Mariya Pylayev

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jai.hye

It is said that Americans and citizens around the globe simply are not paying attention. Supposedly all this insanity happening in economies around the globe was pre-planned, and the value of the dollar is being manipulated for a global currency. We are likely in for an even longer and bumpier ride than ever imagined while we sit back and take it.

March 18 2014 at 2:27 PM Report abuse rate up rate down Reply
republicanslostagain

HOW TO FIX THE ECONOMY? Think Like Henry Ford

Some people argue that the way to fix the economy is to give tax cuts to the highest-earning Americans--the "job creators"--so that they can invest in new companies and create jobs.

Well, we'd all like to pay fewer taxes, but unfortunately, the "tax cuts for the rich" approach almost certainly won't work. Here are a few reasons why:

The richest Americans and companies already have plenty of cash
The reason these rich Americans and companies aren't investing and "creating jobs" is that most American consumers (customers) are broke
Rich Americans actually don't "create jobs"--the whole economy creates jobs
We've been trying the "tax cuts for the rich" approach for three decades, and it is making the inequality problem worse, not better

Now, some other people are arguing that the way to fix the economy is to increase taxes on the rich and companies and "redistribute" this wealth to American consumers.

We will probably need to raise taxes on everyone a bit to reduce the budget deficit (even if we reduce spending--the gap is that big), but this "wealth redistribution" approach also almost certainly won't work. Here are a few reasons why:

The key to creating a sustainable economic recovery is to get the private-sector cranking, not the public sector
Having the government collect taxes and write checks to more than half the country to make things "fairer" will understandably ruffle the feathers of those who are paying those taxes
Class warfare won't help anyone
This is America: We solve our own problems in this country--we don't wait for someone else to come along and give us a handout.

So, then, if the answer isn't 1) cutting taxes for rich Americans and companies, or 2) raising taxes on the rich and giving the money to the poor, what's the answer?

Let's go back to the problem.

Here's the problem in one simple chart:

Corporate profits (blue) are at an all-time high, and American wages (red) are at an all-time low.

http://www.businessinsider.com/henry-ford-salary-increase-2012-8

March 15 2014 at 10:22 AM Report abuse +1 rate up rate down Reply
golfbird69

high corporate profits will never be shared with the low wage people........this is who they are ripping off.........raising the taxes on the people who pay themselves 1 million or more and at the same time.....lowering the taxes on dividends to perhaps, 10% would distribute the profits much better.........of course you would have to own stock, but most people have at least a passive interest in the market..........and the low tax would only be on common stocks available to the general public and reasonably priced.....say ...under 100 dollars per share

March 15 2014 at 9:00 AM Report abuse +1 rate up rate down Reply
leegfan

Employers know that they are in the driver's seat and many are abusing employees. I have run a food pantry for nearly 20 years and it is getting worse all the time. Workers putting in more than their normal hours without any pay, workers being told they must take a pay cut or leave, workers losing vacations and sick days, workers told they can stay home with a sick kid or can take off a day when they are sick if they are aware that their job may not be there tomorrow, on and on and on. My husband's boss made a bad business decision and he told all employees they had to take a pay cut. My husband is 63 and he is being asked to work more hours for less money. Finding another job is out of the question. In a world where the 85 richest people make as much as the 3.5 BILLION poorest people, something has to be done. Corporate profits have gone thru the roof, but even so, corporations are doing everything they can to decrease wages.

March 15 2014 at 5:47 AM Report abuse +1 rate up rate down Reply
quaii

I suggest anyone reading this article watch the movie "Inequality for all". It features former Labor secretary Reich, who now teaches economics at UC Berkely. I found it eye-opening and sensible. Currently on N etflix.

March 15 2014 at 2:48 AM Report abuse rate up rate down Reply
wbearl

It's called Obamanomics and Socialization. He is equalizing the standard of living by lowering everyone's.

March 15 2014 at 1:48 AM Report abuse +2 rate up rate down Reply
1 reply to wbearl's comment
europlan

wbearl You really need to watch Mr Reich's "Inequality for All" You really do.This country has been so propagandized by the New World Order "globalists' to instill the idea that the US is becoming "socialist" that we have become dysfunctional. Nothing works, Our political system of democaracy has been destroyed by exteme ly wealthy plutocrats, Our economy is in permanent decline (unless youre a wall Streeter . or a member the top 5 percent of the richest Americans., and our family structure just cant take what this new exterme capitalism and "you are on your own' thinking is doing to social stability. The extreme right wing , which supports socialist programs like medicare, social security and agricutural subsidies is going to be in for a shock if we achive one party government under what was once the Republican Party. If that happens in 2016, forget social security and medicare. Paul Ryan and his Ayn Rand addicted ,John Birch Society cronies in Congress will take it away , and then the doo doo will hit the fan,, but it will be too late for the aging boomers and their even older relatives. Die in peace boomers, you will get what you dseserve for allowing te dumbing down of America to happen.

April 06 2014 at 11:37 PM Report abuse -1 rate up rate down Reply
joper201

Ronald Reagan said, "the best welfare program is JOBS".

You all might tell obama that.

March 15 2014 at 1:20 AM Report abuse +1 rate up rate down Reply
2 replies to joper201's comment
golfbird69

i promise.......i will never vote for obama again..........just wish someone would come up with alternatives if they don't like the presidents agenda........guess i will have to watch the fox comedy 2 hours to find out

March 15 2014 at 9:03 AM Report abuse -1 rate up rate down Reply
europlan

joper201 I dont have to tell that to mr Obama. He already knows it, but our dysfuncitonal,in the pockets of billionaire globalists, do not have a clue.Trust me, the power structure that opposes everything that obama has tried to do to improve the economy could not care less about creating jobs.They are all about maximizing global corpoate profits at the expense fo ordinary Americans. too bad those ordinary Americans have bofght into all of the lies,deceptions and raw propaganda that the right wing has perpetrated on them over the past decade or more. The biggest shcok of my life has been the dumbng down of America and the extetn to which people would rather attack a black president than stop shooting themselves in the foot by voting against their own interests. .

April 06 2014 at 11:45 PM Report abuse rate up rate down Reply
joper201

Remember the good old days of 2008 and 2007 when gas was $1.80 a gallon and unemployment was at 4.6%???
People seem to forget the HIGHEST annual rate of unemployment was 6% for one year immediately following 9/11 and trended downward until the very last 2 months of Bush's administration.

March 15 2014 at 1:18 AM Report abuse +2 rate up rate down Reply
colonialhills1

Someone please, find another Jimmy Hoffa, before the United States completely goes under!

March 15 2014 at 12:30 AM Report abuse +1 rate up rate down Reply
Dan Embody

This article has a lot of holes in it.. In my opinion,if you have skills which are in demand, you do a good job, you play your cards right, and are difficult to replace, you CAN still earn big money even in this economy. I know this is true because I do peoples income taxes. I see first hand who makes it and who doesn't.

March 14 2014 at 11:32 PM Report abuse rate up rate down Reply
1 reply to Dan Embody's comment
HAT1701D

Sounds good until you are working in an established manufacturing facility, of one of this nation's oldest companies ( almost 95 years old now ). In the past 5 years it has become a normal thing to watch the high skills, well established, hard workers, with extremely good reputations and many years of experience....being walked to the door. Your opinion, based on doing taxes, is not the same as actually being inside "the machine" ( so to speak ). In just the last two years, I've lost $17,000 dollars of income due to internal restructuring of departments within our facility. Not due to pay, but due to product manufacturing and shifting of personel into locations where hours of work are not as much.

March 15 2014 at 3:24 AM Report abuse rate up rate down Reply

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