Jobs is the most important category for most voters. Especially with unemployment falling to 7.8% in September, President Obama can claim success in the jobs creation department. Probably the most potent line of attack remaining for Governor Romney is to attack the quality of the jobs that have been created. Many of them are part-time jobs (link) and median income has fallen. Here is the most recent BLS chart showing recent changes in hourly wages:
In the last presidential debate, Governor Romney claimed that median income declined $4,300 under President Obama. Based on Census Bureau reports, Factcheck.org puts the decline in median household income at $2,492, even after adjusting for inflation.
The main problem with the Factcheck.org number is that it does not include the context, which includes a precipitous drop in median income in 2008. The recent Census Bureau report also showed that median household income after inflation fell to $50,054, 8 percent lower than in 2007. (link) That is a $4004.32 in median household income since 2007. If we subtract the $2492 Factcheck.org says happened during President Obama's first term, $1512.32 of that decline happened in 2008 before President Obama took office. That parallels the steep decline in jobs during 2008:
This gives some important context for the decline in the number of full-time jobs and the decline in median income. But there need to be some solutions offered to deal with these issues. In August, the National Employment Law Project (NELP) put out a data brief titled "The Low Wage Recovery and Growing Inequality." (pdf link) This data brief had four main points describing the jobs situation in various industries and the impact of that situation on the overall quality of the jobs we are adding in the recovery. Let's start with point two:
This point is very important because it identifies two areas that President Obama has already offered a solution for: construction and government jobs. Point two of the American Jobs Act specifically mentions government jobs and projects that the Construction industry could benefit from:
2. Putting Workers Back on the Job While Rebuilding and Modernizing America
A “Returning Heroes” hiring tax credit for veterans: This provides tax credits from $5,600 to $9,600 to encourage the hiring of unemployed veterans.
Preventing up to 280,000 teacher layoffs,while keeping cops and firefighters on the job.
Modernizing at least 35,000 public schools across the country,supporting new science labs, Internet-ready classrooms and renovations at schools across the country, in rural and urban areas.
Immediate investments in infrastructure and a bipartisan National Infrastructure Bank, modernizing our roads, rail, airports and waterways while putting hundreds of thousands of workers back on the job.
A New “Project Rebuild”, which will put people to work rehabilitating homes, businesses and communities, leveraging private capital and scaling land banks and other public-private collaborations.
Expanding access to high-speed wireless as part of a plan for freeing up the nation’s spectrum.
EPI has recently suggested that a focus on government jobs would give the biggest boost to the economy. So perhaps there could be an additional specific focus on that. But all of these projects have been blocked by Republicans at both the state and national level. (See point 5
here.) Perhaps most importantly, Paul Ryan has been a main participant in this willingness to sabotage the economy during the planning and carrying out of this obstruction of President Obama. (
link)
This brings us to a second point of potential improvement in the quality of the jobs being created: focusing on low wage employers by raising the minimum wage. The first point in the NELP brief is probably the worst jobs news: Most of the growth in the recovery has been in low wage jobs:
In its July brief (pdf link), NELP addressed this issue in more detail, pointing out that these low wage employers are mostly large corporations, most of which have recovered from the recession, are currently paying their top CEO an average of $9.4 million and have collectively returned $174.8 billion to shareholders over the last five years:
The majority (66 percent) of low-wage workers are not employed by small businesses, but rather by large corporations with over 100 employees;
The 50 largest employers of low-wage workers have largely recovered from the recession and most are in strong financial positions: 92 percent were profitable last year; 78 percent have been profitable for the last three years; 75 percent have
higher revenues now than before the recession; 73 percent have higher cash holdings;
and 63 percent have higher operating margins (a measure of profitability).
Top executive compensation averaged $9.4 million last year at these firms, and
they have returned $174.8 billion to shareholders in dividends or share buybacks
over the past five years.
Here are a few more details about the financial health, specifically the profitability and cash holdings, of these low wage corporations:
Among the 50 largest low‐wage employers, we find:
92 percent were profitable last year
78 percent were profitable for the past 3 years
75 percent are earning higher revenue now than before the recession
63 percent are earning higher profits now than before the recession
63 percent have a higher operating margin (a measure of profitability) now than before the recession
73 percent have higher cash holdings now than before the recession
However, at the same time these industries are making money and highly compensating executives, they are paying their workers the same low wages with no payraises:
As most of the largest low‐wage employers in the U.S. have successfully recovered from the recession, they have shared their profits generously with their top executives and shareholders, while wages for frontline workers in these industries have remained stagnant[.]
Here are the recent profits (last four fiscal years) for the top three low wage corporations (WalMart, Yum and McDonalds). These healthy profits stand in stark contrast to the wage stagnation in these same three corporations:
Articles and studies discussing the general impact of raising the minimum wage can be found here, here, here, here and here. Pieces that discuss WalMart specifically are here and here.
The Christian Science Monitor has compared President Obama and Mitt Romney on this issue:
When Obama was campaigning in 2008, he said he would raise the minimum wage to $9.50 an hour by 2011. “Since then, there has not been a peep,” says Jen Kern, the minimum wage coordinator at the National Employment Law Project, an advocacy group in Washington. “Our hope is that this will come up in the campaign.”
It already has for Romney – during the primary. Asked by NELP about his stance on the issue, he said in February he favors raising the minimum and then raising the wage each year to reflect inflation. “He said that was what his position was in Massachusetts and had been ever since,” says Ms. Kern.
Then an editorial in The Wall Street Journal questioned his stand, followed by a verbal spanking by radio commentator Rush Limbaugh. By the time he got to "The Larry Kudlow Show" on CNBC, Romney was full retreat. In March, his spokeswoman, Andrea Saul, told The Huffington Post, “Given the high rate of joblessness, this is not the time for anyone to be proposing an increase in the minimum wage."
Finally, in addition to the problem areas identified above, there have been some bright spots in the recovery jobs overall. The NELP report saved that good news for last. Point four included the good news that the durable manufacturing industry and the health care industry, among a few others, are adding good jobs:
This news dovetails well with other findings about the strength of manufacturing growth in the current recovery when compared other recent economic recoveries. A systematic comparison between Democratic presidents and Republicans and found that President Obama's manufacturing growth is better than all but one of the last nine Republican Presidential terms. Of all nine Republican terms going back to Eisenhower, only Reagan's second term was better:
Based on all three of our measures, Obama’s manufacturing jobs record is currently better than eight of the nine Republican presidential terms. President Ronald Reagan’s second term does slightly better than Obama’s incomplete first term, but the numbers are close enough that this may change once we have all the numbers.
Here is their graph showing from first quarter of term to first quarter of next term(see all three graphs
here):