Immigration News: January, 2005 - Volume 12

Labor, Temps, $17 an Hour

US employment increased by 1.6 million between November 2003 and November 2004, but the discrepancy in the findings of the household and payroll surveys continued. The monthly survey of 60,000 households showed 2.6 million more people employed in September 2004 than in March 2001, while the separate payroll survey of 400,000 establishments showed 490,000 fewer jobs. Studies of workers who have been displaced by layoffs and plant closings show that, when re-employed, displaced workers earn 20 percent less, a doubling of the pay drop that occurred in the 1990s.

The Monster Employment Index (Monster.com), which measures jobs available rather than employment, rose 22 percent between January and September 2004, and then stabilized. Web sites accounted for 20 percent of all employment advertising in 2003, up from just three percent in 2000.

The US unemployment rate peaked at 6.3 percent in June 2003, and was 5.4 percent in Fall 2004, when the median full-time wage earner received $632 a week; about 60 percent of workers get health benefits and retirement plans from their employers. The 2002-2012 employment projections show that seven of the 10 fastest-growing occupations over the next decade are low-paying, offering wages of about $1,500 a month or less. Nurses and college teachers are one and two, followed by retail salespersons, customer service representatives, food preparation workers, cashiers and janitors.

The temporary help industry is expanding. Since 1995, employment services firms have deployed more than two million workers a day to US employers, including a peak 2.5 million in 2001. Many employers hire workers via temp firms to screen them: the temp is an employee of the temp firm, not of the place where she is working, and thus if the worker is not to the employer's liking, he can simply request that she not come back.

Temps receive lower than average wages and lesser benefits. To employers, temp firms stress the flexibility they provide. To workers, they stress the possibility of shifting to permanent status when they find a job they like. About 46 percent of temps are employed in services and 21 percent in manufacturing. The larger contingent work force (what DOL calls workers with alternative work arrangements) was 16 million in 2001, including temps, independent contractors, on-call workers and contract company workers, about the same as the number of union members.

Many employers hire workers via temp agencies. Toyota in Georgetown, Kentucky hires new workers via a Manpower agency on site at $12.60 an hour with few benefits; in the fall of 2004 if a new hire becomes a regular Toyota team member, he/she would earn $24.20 an hour, plus health and pension benefits. Toyota, which has not laid off a regular US employee since its opening in 1988, had about 7,800 regular and 425 temp workers in Fall 2004. The percentage of temps is usually higher at the smaller plants that supply assembly operations such as Toyota.

Among the typical 2.1 to 2.5 million temps deployed every day, more hold precision production, repair, craftsmanship, operations, fabrications and labor jobs, 31 percent, than clerical and administrative support jobs, 30 percent. In surveys, fewer than half of those in temp jobs report that they are satisfied with their jobs.

Employment in US tech-related jobs peaked at nearly 6.5 million in 2000, and average wages were about $27 an hour ($54,000 a year) in 2003. However, job security has waned since 2000, and many IT workers have become temps, leading to complaints that to survive, some must become migrants who work for far less than the $27 an hour average and no benefits.

$17 an hour. The Washington Post in Fall 2004 had several articles on workers earning $17 an hour (the average wage of 128 million US workers in 2002 was $17.10 an hour) or $35,000 a year. Many were high school graduates who had lost manufacturing jobs that offered health and pension benefits, and whose new service sector jobs offered lower hourly wages, fewer benefits and less security.

A woman earning $16 an hour for an airline was laid off with retraining benefits and went back to work as a nurse's aid for a lower hourly wage, fewer benefits, and the expectation that she would continue training to keep up with advances in medicine. Analysts say retraining is key, because tomorrow's middle-class jobs are likely to be enhanced variations of today's lower-wage jobs. Clerical positions keeping medical records, for instance, are being transformed into higher-paying technician jobs that are structured to involve both computer skills and the ability to talk to doctors and nurses.

Global competition (trade that allows lower wage workers abroad to do work formerly done in higher-wage countries) and rapid advances in technology (enabling computers to do jobs previously done by workers) mean that economic growth is associated with fewer new jobs than was previously the case. The US debate concerning this development is whether new industries offering new jobs will emerge or whether there is a hollowing out of the US economy that threatens the middle class.

Between 1969 and 1999, the share of US jobs classified as blue-collar and administrative support-typical middle class jobs for those with a high-school diploma-fell from 56 to 39 percent of a growing labor force. The share of jobs offering lower and higher than average wages rose-- janitors and fast-food workers on the one hand, and lawyers and doctors on the other. Low-end jobs cannot support middle-class lifestyles, and high-end jobs require more than a high-school education. The gap between the wages of a 30-year-old male high school graduate and a 30-year-old male college graduate was 17 percent in 1979, and 50 percent in 1999.

Most analysts say that future success in the labor market requires technology savvy, analytical thinking and interpersonal skills; such jobs are hard to automate or offshore to lower wage workers abroad. However, even in future middle-class jobs, there is likely to be less security, including fewer defined-benefit pensions and more expensive health insurance in the smaller US firms that often provide these jobs.

Two-thirds of US workers do not have a college degree, and proposals to help them adjust to the more fluid and less secure labor market of the future include personal retraining accounts, which would provide $3,000 for re-employment, with workers who find new jobs within 13 weeks keeping the balance or wage insurance, so that employers hiring displaced workers would receive a government subsidy or workers going back to work at lower wages would receive a supplement.

Poverty, Pensions, Wealth. The social safety net is shrinking. The federal minimum wage in 2003 dollars was $7.50 an hour in 1978, and hit a low of $5 an hour in 1989; it is now $5.15 an hour. In 1979, about 38 percent of private sector workers had traditional defined-benefit pension plans; in 2001, only 20 percent did. Job tenure has fallen from 11 to eight years, and fewer employers offer their workers health insurance. In 2003, a record 1.6 million Americans declared bankruptcy.

However, the average compensation of the top five leaders of public companies continues to rise. It almost doubled in the late 1990s, reaching almost 10 percent of total corporate income by 2002. In 1991, the average chief executive of a large company earned 140 times the pay of an average worker. By 2003, it was 500 times.

In 2001, for the first time, the top 20 percent of US households received more than half of all income, prompting Alan Greenspan to assert that the "increasing concentration of incomes in this country is not a very desirable thing to allow to happen."

Most older US corporations have defined benefit pension plans, meaning that a retired worker's pension depends on her years of employment and highest salary. However, many newer US firms have defined contribution pensions, meaning that the company makes an annual contribution on behalf of a worker who manages company and personal deposits, and pension payments depend on how much is contributed and how it grows. In November 2004, United Airlines asked a bankruptcy judge to terminate its pensions. If approved, the federal Pension Benefit Guaranty Corporation would take over the plans, reduce benefits, and United would save significantly, since it would then replace its defined benefit with defined contribution plans.

The median wealth-assets minus debts-- of non-Hispanic white households was $88,700 in 2002, compared to $8,000 for Hispanics and $6,000 for Blacks. Wealth is more concentrated among Hispanics and Blacks than among whites: the wealthiest 25 percent of minorities had over 90 percent of the total wealth of each group, compared to 80 percent among whites.

The Pew Hispanic Center noted that the 10 million Latin American immigrants in the United States send about $30 billion in remittances to their families back home; if these funds were invested in the US, the wealth picture for Hispanics would change. For example, 74 percent of US whites own homes, compared to 47-48 percent for Hispanics and Blacks.

Day laborers often gather in the parking lots of convenience and home improvement stores waiting for contractors and homeowners to hire them. Some cities are cracking down on loitering, with police arresting those in parking lots and, when their fingerprints reveal immigration violations, turning those arrested for the misdemeanor crime of loitering over to Immigration and Customs Enforcement.

El Paso. The New York Times profiled Mexican immigrants in El Paso, many of whom arrived when the city was sometimes referred to as the US Blue Jean Capital and who are now jobless as US firms closed their sewing factories. The US government certified that 7,800 workers in El Paso County were displaced by Nafta over the past three years, double the number displaced in Cook County, Illinois the second county. Once certified, displaced workers are eligible for training that is supposed to enable them to earn 80 percent of what they earned before displacement.

In El Paso, Spanish is more common than English, and a quarter of workers have not completed high school. Mexican immigrants, many in their 50s, are willing to work hard for wages that are low by US standards, but they are not low enough for firms that can move to Mexico or China.

The Census reported 294 million US residents in July 2004, up almost three million or one percent from the year earlier. States in the West and South, led by Nevada, grew fastest.

Greg Schneider, "IT Unemployment Now Exceeds Overall Jobless Rate," Washington Post, November 9, 2004. Charlie Leduff, "Mexican-Americans Struggle for Jobs," New York Times, October 13, 2004. Griff Witte, "As Income Gap Widens, Uncertainty Spreads," Washington Post, September 20, 2004.