Thursday, April 24, 2014
The news last week that the national unemployment rate fell from 9.8 percent to 9.4 percent kindled new hope that companies may be starting to hire and that true recovery from the Great Recession is beginning to take root.
Both President Obama and Gov. Paul LePage came out strongly on their bully pulpits to encourage this welcome news. We must -- each said in his own way -- support job creation.
And so we must. With 14 million people unemployed nationwide and more than 50,000 unemployed in Maine, we certainly need jobs. But more jobs alone will not return us to prosperity.
I was struck recently by a statement in a joint report from the Kauffman Foundation and the Information Technology and Innovation Foundation that between 2000 and 2007 "there was a negative 11 cent (per hour) change in U.S. wages through occupational shift."
A higher percent of the total U.S. labor force was employed in lower paying occupations in 2007 than in 2000.
"The point," the report asserted, "is that it is not enough for the United States to just create jobs, any jobs." We must, it went on to say, create higher-wage jobs through greater innovation.
It is interesting, in this regard, to look at the most recent Department of Labor employment projections for Maine.
Between 2008 and 2018, Maine will -- according to the DOL -- see average annual openings for approximately 18,000 jobs. Of these, just over 15,000 will be to replace workers who retire or leave for other jobs, and just under 3,000 will be net new jobs.
Our future prosperity, therefore, will depend in large part on the nature of these new jobs. What skills will they require and what wages will they pay?
In 2009, the average hourly wage earned in Maine was $18.53. Of 22 major occupational categories, nine paid average hourly wages of more than $18.53 and 13 paid average hourly wages below that level.
If we are to prosper in the future, therefore, we better hope that more of our job growth occurs in those occupations paying above-average wages.
So what does the labor department say is in the cards? At first glance, precious little.
In 2008, the occupational categories paying above-average wages accounted for 29.6 percent of all jobs.
In 2018, they are projected to account for 30.1 percent of all jobs. Our occupational shift to high-wage prosperity amounts to about one-half of 1 percent of total employment -- hardly a picture of dynamic innovation.
However, if we drill a little deeper into the numbers, we will see reason for hope.
Within the 13 occupational groups paying below-average wages, the majority of job growth will occur because of replacement need rather than because of net new job growth.
For the "below-average wage" group as a whole, 87 percent of annual openings will occur to replace existing workers.
Indeed, if we exclude the two largest-growing members of this group -- health care and personal service occupations -- replacement accounts for 89 percent of job openings.
In the above-average wage group, in contrast, replacement constitutes only 79 percent of job openings. More than one in five openings is the result of net new job growth.
In health care and related technical occupations, net new growth accounts for nearly 40 percent of new job openings.
In computer and math-related occupations, net new growth accounts for 32 percent of job openings.
And in business and financial operations occupations, net new growth accounts for nearly 26 percent of projected net new job openings.
This, then, is the challenge of prosperity.
Can we push these labor department projections along a bit farther? Can we increase the volume of health, medical, technical, math, science, financial and managerial skills in our labor force sufficiently to draw to our state more of the companies that need these skills?
If we can, we will certainly be on the road to far greater prosperity, even if our overall rate of job growth remains relatively slow.
It's not the number of jobs, but the wages they pay that will determine our future.
Charles Lawton is senior economist for Planning Decisions, a public policy research firm. He can be reached at: email@example.com.