Bush's "New Jobs" in Low-Wage Industries; Wage-Levels Remain Stagnant

By Jonathan Weisman and Nell Henderson
Washington Post Staff Writers
Wednesday, June 23, 2004; Page E01

Employers have added 1.2 million jobs this year, and average weekly earnings rose 0.3 percent in May and 2.5 percent in the 12 months that ended in May, seasonally adjusted, the Labor Department reported.

But Democrats say paychecks are failing to keep up with the cost of living. After adjusting for inflation, average weekly earnings fell 0.4 percent last month and 0.5 percent in the 12-month period.

"I believe we can do better than rising costs and shrinking incomes," Sen. John F. Kerry (Mass.), the likely Democratic presidential candidate, told an AFL-CIO convention last week.

Some economists also point to stagnant wages and eroding job quality as dark clouds looming over the economic recovery.

"Despite the well-advertised pick-up of job growth, recent trends in real wage income remain very disappointing," lamented Stephen S. Roach, chief economist at Morgan Stanley, in a June 7 memo to clients. "This, in my view, underscores one of the most serious shortcomings of this recovery -- an unprecedented shortfall of the most important piece of personal income growth," wages and salaries.

Over the first 29 months of the economic recovery, total wages and salaries have risen less than 3 percent after adjusting for inflation -- a fraction of the 9 percent gains of the previous six upturns, Roach said. That works out to a $280 billion income gap between where workers are and where they should be, he concluded.


CIBC World Markets, a Toronto-based investment banking firm, reached a similar conclusion in a report issued Monday. That study found that U.S. job creation since late 2001 has been concentrated in low-paying industries such as hospitality, education and personal services, while job losses have hit higher-wage sectors such as transportation, manufacturing, utilities and natural resources.

"The message is clear: The vast majority of the jobs that evaporated during the job-loss recovery were high-quality jobs," the CIBC study concluded.

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