Work in the United States

Recovery from the Great Recession

The Great Recession of 2007-2009 was brought on, at least in part, by the lending practices of the early twenty-first century. During this time, banks provided adjustable-rate mortgages (ARM) to customers with poor credit histories at an attractively low introductory rate (often after convincing the buyer that the property’s value would quickly increase to such a degree that the unrealistic debt would become realistic). After the introductory rate expired, the interest rate on these ARM loans rose, often dramatically, creating a sizable increase in the borrower’s monthly mortgage payments. As their rates adjusted upward, many of these “subprime” mortgage customers were unable to make their monthly payments and stopped doing so, known as defaulting. The widespread implosion of these mortgages, which had themselves been used to secure other forms of risky borrowing and speculation, put a strain on the financial institutions that had made the loans, and this stress rippled throughout the entire global economy.

The United States fell into a period of high and prolonged unemployment, extreme reductions in wealth (except at the very top), stagnant wages, and loss of value in personal property (houses and land). The S&P 500 Index, which measures the overall share value of selected leading companies whose shares are traded on the stock market, fell from a high of 1565 in October 2007 to 676 by March 2009. Today, however, unemployment rates are down in many areas of the United States, the Gross Domestic Product increased 4.6 percent in the second quarter of 2014 (US Department of Commerce–Bureau of Economic Analysis), property owners have noted a slight increase in the valuation of housing, and the stock market appears to be reinvigorated.

While these and several other factors indicate the United States is on the road to recovery, many people are still struggling. The size, income, and wealth of the middle class have been declining since the 1970s— effects that were hastened by the recession. Overall, the number of adults in the middle class fell by ten percent between 1971 and 2011. Before the recession, the median household income for a lower-income family was $26,923, but that amount actually dropped to $25,624 by 2016. While the income levels of middle-income Americans remained more stable over this same time period (declining from around $78,000 to $74,000 and then back up to $78,000 in 2016), only higher-income houses saw significant financial gains, other furthering the income disparity between the lower, middle, and upper-class.^[1] Today, wealth is distributed inequitably at the top. Corporate profits have increased more than 141 percent, and CEO pay has risen by more than 298 percent. G. William Domhoff (University of California at Santa Cruz) reported that “In 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers).”

One indicator of general economic conditions is the rate at which individuals are accessing the country’s safety net or social welfare programs. Between 2000 and 2013, the number of people relying on the Supplemental Nutrition Assistance Program (SNAP, formerly known as the “food stamp” program), climbed from 17,194,000 to more than 47,636,000. The sharpest increase paralleled the subprime mortgage crisis of 2009, with the rolls rising from 28,000,000 to more than 40,000,000 individuals receiving food assistance in a span of two years (United States Department of Agriculture 2014). In 2018, the number of SNAP recipients was 40,324,000, the same number as in 2010^[2]

The economic downturn had a ripple effect throughout the economy. For instance, it delivered a significant blow to the once-vibrant U.S. automotive industry. While consumers found loans harder to get due to the subprime mortgage lending crisis and increasing fuel costs, they also grew weary of large, gas-guzzling sport utility vehicles (SUVs) that were once the bread-and-butter product of U.S. automakers. As customers became more aware of the environmental impact of such cars and the cost of fuel, the large SUV ceased to be the status symbol it had been during the 1990s and 2000s. It became instead a symbol of excess and waste. All these factors created the perfect storm that nearly decimated the U.S. auto industry. To prevent mass job loss, the government provided emergency loans funded by taxpayer dollars, as well as other forms of financial support, to corporations like General Motors and Chrysler. (General Motors, once the world’s largest corporation, declared bankruptcy in 2009.) While the companies eventually recovered, the landscape of the U.S. auto industry was changed as result of the economic decline.

Recent Economic Conditions

While the job market on the whole is again growing, it is doing so in a polarized fashion. Polarization means that a gap has developed in the job market, with most employment opportunities at the lowest and highest levels and few jobs for those with midlevel skills and education. At one end, there has been strong demand for low-skilled, low-paying jobs in industries like food service and retail. On the other end, some research shows that in certain fields there has been a steadily increasing demand for highly skilled and educated professionals, technologists, and managers. These high-skilled positions also tend to be highly paid (Autor 2010).

The fact that some positions are highly paid while others are not is a characteristic of the class system, an economic hierarchy in which movement (both upward and downward) between various rungs of the socioeconomic ladder is possible. Theoretically, at least, the class system as it is organized in the United States is an example of a meritocracy, an economic system that rewards merit––typically in the form of skill and hard work––with upward mobility. A theorist working in the functionalist perspective might point out that this system is designed to reward hard work, which encourages people to strive for excellence in pursuit of reward, while a theorist working in the conflict perspective might counter that hard work does not guarantee success even in a meritocracy, because social capital––the accumulation of a network of social relationships and knowledge that will provide a platform from which to achieve financial success––is often required to access the high-paying jobs. Increasingly, we are realizing intelligence and hard work aren’t enough. If a person lacks access, connections, and certain forms of knowledge, they are unlikely to experience upward mobility.

With so many jobs being outsourced or eliminated by automation, what kind of jobs are in demand in the United States? While fishing and forestry jobs are in decline, other labor markets jobs are expanding. These include community and social service, personal care and service, finance, computer and information services, and healthcare. The chart below, from the U.S. Bureau of Labor Statistics, illustrates areas of projected growth.

The professional sector and related jobs, which include any number of positions, typically require significant education and training and tend to be lucrative career choices. Service jobs, according to the Bureau of Labor Statistics, can include everything from jobs with the fire department to jobs scooping ice cream (Bureau of Labor Statistics 2010). There is a wide variety of training needed, and therefore an equally large wage discrepancy. One of the largest areas of growth by industry, rather than by occupational group (as seen above), is in the health field. This growth is across occupations, from associate-level nurse’s aides to management-level assisted-living staff. As baby boomers age, they are living longer than any generation before, and the growth of this population segment requires an increase in capacity throughout our country’s elder care system, from home healthcare nursing to geriatric nutrition.

Notably, jobs in farming are in decline. This is an area where those with less education traditionally could be assured of finding steady, if low-wage, work. With these jobs disappearing, more and more workers will find themselves untrained for the types of employment that are available.

Another projected trend in employment relates to the level of education and training required to gain and keep a job. Growth rates are higher for those with more education. Those with a professional or master’s degree may expect job growth of 13.1 and 16.7 percent respectively between 2016 and 2026, while jobs that require a bachelor’s degree are projected to grow 10.1 percent. At the other end of the spectrum, jobs that require a high school diploma or equivalent are projected to grow at only 5.1 percent, while jobs that require less than a high school diploma will grow 6.4 percent. Quite simply, without a degree, it will be more difficult to find a job. It is worth noting that these projections are based on overall growth across all occupation categories, so obviously there will be variations within different occupational areas. However, once again, those who are the least educated will be the ones least able to fulfill the American Dream.^[3] 

In the past, rising education levels in the United States had been able to keep pace with the rise in the number of education-dependent jobs. However, since the late 1970s, men have been enrolling in college at a lower rate than women, and graduating at a rate of almost 10 percent less. The lack of male candidates reaching the education levels needed for skilled positions has opened opportunities for women, minorities, and immigrants (Wang 2011).

The Wage Gap in the United States

The Equal Pay Act, passed by the U.S. Congress in 1963, was designed to reduce the wage gap between men and women. The act in essence required employers to pay equal wages to men and women who were performing substantially similar jobs. However, more than fifty years later, women continue to make less money than their male counterparts. According to a report released by the White House (National Equal Pay Taskforce 2013), “On average, full-time working women make just 77 cents for every dollar a man makes. This significant gap is more than a statistic—it has real-life consequences. When women, who make up nearly half the workforce, bring home less money each day, it means they have less for the everyday needs of their families, and over a lifetime of work, far less savings for retirement.”

Women have been entering the workforce in ever-increasing numbers for several decades. They have also been finishing college and going on to earn advanced degrees at a higher rate than men do. This has resulted in many women being better positioned to obtain high-paying, high-skill jobs. In 2018, women still earned 85% of what men earned, according to a Pew Research Center analysis of median hourly earnings for both full- and part-time workers in the United States. Based on this estimate, it would take an extra 39 days of work for women to earn what men did in 2018 (Pew Research, 2019). Countless studies that have controlled for work experience, education, and other factors unanimously demonstrate that disparity between wages paid to men and to women still exists (Pew Research Center 2014).

Race and The Workforce  

As shocking as it is, the gender wage gap actually widens when we add race and ethnicity to the picture. For example, African American women make on average 64 cents for every dollar a Caucasian male makes. Latina women make 56 cents, or 44 percent less, for every dollar a Caucasian male makes. African American and Latino men also make notably less than Caucasian men. Asian Americans tend to be the only minority that earns as much as or more than Caucasian men.^[4]

This discrimination is also evidenced by the fact that Blacks and Latinos get fewer callbacks for job interviews and have fewer job opportunities, when compared with whites. In a meta-analysis of research conducted since 1990, sociologists found that white applicants with identical résumés as Black applicants consistently received an average of 36% more callbacks than Black applicants. This number remained essentially unchanged in 25 years, between 1990 and 2015. White applicants also received 24% more callbacks than Latino applicants, and this number has improved slightly over the same time period.^[5]

The Black unemployment rate is essentially double that of whites. Data from the third quarter of 2018 revealed the Black unemployment rate to be about 6.3 percent, while the white unemployment was at 3.2 percent. Hispanic unemployment was also higher than whites, at 4.5%, whereas Asian workers had a slightly lower rate, at 3.0%.^[6]

Immigration and the Workforce

Simply put, people will move from where there are few or no jobs to places where there are jobs, unless something prevents them from doing so. The process of moving to a country is called immigration. Due to its reputation as the land of opportunity, the United States has long been the destination of all skill levels of workers. While the rate decreased somewhat during the economic slowdown of 2008, immigrants, both legal and illegal, continue to be a major part of the U.S. workforce.

In 2005, before the recession arrived, immigrants made up a historic high of 14.7 percent of the workforce (Lowell et al. 2006). During the 1970s through 2000s, the United States experienced both an increase in college-educated immigrants and in immigrants who lacked a high school diploma. With this range across the spectrum, immigrants are well positioned for both the higher-paid jobs and the low-wage low-skill jobs that are predicted to grow in the next decade (Lowell et al. 2006).

A 2016 survey revealed that foreign-born full-time workers had a median salary at 83.1% of the median earnings for native-born workers ($715 compared to $860); foreign born men earned 79% of the median earnings of native-born men, while foreign-born women earned 86% of their native-born counterparts.^[7]

In the early 2000s, it certainly seemed that the United States was continuing to live up to its reputation of opportunity. But what about during the recession of 2008, when so many jobs were lost and unemployment hovered close to 10 percent? How did immigrant workers fare then? The answer is that as of June 2009, when the National Bureau of Economic Research (NEBR) declared the recession officially over, “foreign-born workers gained 656,000 jobs while native-born workers lost 1.2 million jobs” (Kochhar 2010). As these numbers suggest, the unemployment rate that year decreased for immigrant workers and increased for native workers. The reasons for this trend are not entirely clear. Some Pew research suggests immigrants tend to have greater flexibility to move from job to job and that the immigrant population may have been early victims of the recession, and thus were quicker to rebound (Kochhar 2010). Regardless of the reasons, the 2009 job gains are far from enough to keep them inured from the country’s economic woes. As Brookings Senior Fellow Vanda Felbab-Brown explains “the impact of immigrant labor on the wages of native-born workers is low… However, undocumented workers often work the unpleasant, back-breaking jobs that native-born workers are not willing to do.”^[8]

While the political debate is often fueled by conversations about low-wage-earning immigrants, there are actually as many highly skilled––and high-earning––immigrant workers as well. Many immigrants are sponsored by their employers who claim they possess talents, education, and training that are in short supply in the U.S. These sponsored immigrants account for 15 percent of all legal immigrants (Batalova and Terrazas 2010). Interestingly, the U.S. population generally supports these high-level workers, believing they will help lead to economic growth and not be a drain on government services (Hainmueller and Hiscox 2010). On the other hand, illegal immigrants tend to be trapped in extremely low-paying jobs in agriculture, service, and construction with few ways to improve their situation without risking exposure and deportation.