On Monday, the US Conference of Mayors released
a report showing that the average pay for jobs created following the 2008
financial crisis pay much less than the average wage in those industries that
suffered substantial job losses pre-2008. The USCM report found that while jobs
in sectors such as construction and manufacturing paid an average of more than
$61,000 before the recession, the new jobs pay only about $47,000, or 23% less.
In addition, the report says average household income in the US is now about
$51,000, which is 3% lower than it was in 2005.
Why This Matters For Small Business:
The report was released as the USCM’s Cities of Opportunity Task Force – which
was formed by USCM president Sacramento Mayor Kevin Johnson and is led by New
York City Mayor Bill de Blasio – met in New York on Monday to discuss widening
income inequality, an issue that Democratic candidates have been trying to
spotlight ahead of November’s elections. The USCM task force, whose membership
is overwhelmingly Democratic, is reportedly planning to recommend minimum wage
increases as a means to address income inequality.
Niraj Chokshi
of the Washington
Post writes
that while “minimum wage increases are [a] potential solution” to income
inequality, “some argue higher wages discourage businesses from hiring.”
According to Chokshi, “Policies that chip away at high unemployment also can
help to reduce inequality by providing workers who wouldn’t otherwise get it
with a source of income.”
Likewise, in an
op-ed for the Wall
Street Journal,
Michael Saltsman, research director at the Employment Policies Institute, makes
the case that expanding the Federal Earned Income Tax Credit would do more for
low-income workers than raising the federal minimum wage to $10.10/hr as
President Obama has proposed. In particular, Saltsman advocates giving more
benefits of the EITC to childless workers, who he says get less out of the
program than do workers with families.
Further Reading:
Much of the media
coverage of the USCM report focuses on the wage gap statistics as opposed to
the conclusions about the type of jobs that have been created since President
Obama took office. For instance, under the headline, “Wage Gap Grows Across
US,” the Boston
Globe says
the report’s conclusion is that “the rich keep getting richer while middle- and
low-income households fall further behind.” Reuters, NBC News, the Los
Angeles Times,
the Chicago
Tribune,
the Sacramento
(CA) Bee
and the Milwaukee
Journal Sentinel
are among the other media outlets that covered the release of the USCM report.
Find the latest research, polls and information on critical small business trends, including NFIB’s well-known monthly Small Business Economic Trends report.
