An Economy For Everyone: July Good Jobs Recap

Patrick DugganQuality Jobs

small business bakery

In order to build wealth and create opportunities in and across America’s underserved communities, and reverse the troubling trends we’re seeing in our economy, we no longer find it defensible to focus on job creation alone. It’s clear that job creation does not itself equate to lasting economic change. And so, we must shift our focus to the creation of higher quality jobs — jobs that are good for workers and their families, good for businesses, and good for communities — enabling us to build an economy that works for everyone.

Each month, we bring you the latest roundup of news from the fight for quality jobs for working people.

Taking Stock

June was the eighth anniversary of the end of the recession, when the jobless rate more than double what it is today. The economy has completely recovered over that time, at least in terms of the number of jobs on paper. Employers added an impressive 222,000 jobs in June, and the jobless rate remained at 4.4 percent. But eight years of recovery and a tighter labor market hasn’t led to workers’ wages increasing at all. In fact, with so many jobs being created as part-time, low-wage, or on a contract basis without benefits, many workers have yet to benefit from eight years of economic expansion.

A lot of the reasons behind that have to do with policy – or lack thereof. But could part of it be that we’re stuck in an old dynamic? A great article this month on Slate looks at how, by many measures, workers are in a good position to rate higher pay: a record 82 straight months of jobs growth, an unemployment rate of 4.4 percent, and a record 146.4 million Americans with payroll jobs. There are a whopping 5.7 million job openings (well over twice the level of eight years ago). Meanwhile, baby boomers are aging out of the workforce at a rapid clip and Mexicans, many of whom crossed the border to work, have been leaving the U.S. for years. The demand for workers is high.

Given these conditions, wages should be rising sharply. But look at this chart from the Atlanta Federal Reserve: They haven’t been, and they’re not. The New York Times featured a Columbus, Ohio, cleaning company owner mystified that he couldn’t find applicants for his $9.25-per-hour jobs (“I sometimes wish there was actually a higher unemployment rate,” he actually said).

If not a single person applies for your job, the pay probably isn’t fair. But that’s where America remains stubbornly stuck: Employers won’t pay enough, and workers either won’t or can’t demand more. There are likely a lot of reasons, but the biggest, or least most fixable, may be psychological: From an economic perspective, both sides of the hiring market should have the power to increase overall wages in the current climate—but they aren’t.

How Monopolies Affect American Workers

When you think of the term “monopoly” what comes to mind? Aside from the board game, you probably think about one company controlling everything – like AT&T being the only phone company in America or Standard Oil controlling almost all American oil and gas operations. The idea of monopolies came back into the mainstream this month with the news that Amazon was purchasing Whole Foods.

The rise of Amazon over the past two decades has accelerated the collapse of traditional retail outlets, both big chains and small businesses. According to The New Republic, Wall Street analysts have compiled a “Death by Amazon” index to track the companies most likely to be killed off by the online giant. This year alone Walmart, JCPenney, and Rite Aid plan to shutter or sell off nearly 1,200 stores and lay off hundreds of thousands of workers. In fact, since Amazon’s inception it’s killed two better-paying jobs for every one job it creates. Up until now that damage was limited to retail, but now that Amazon is expanding into groceries, many more hundreds of thousands of jobs could be erased by one company.

Amazon didn’t come to dominate the way we shop because of its technology. It did so because the government has let corporate giants to take over an ever-increasing share of the economy by purchasing more and more of their competitors. Amazon purchased Zappos. Facebook purchased Instagram. Google purchases startups at a rapid clip.

Monopoly is the enemy of free-market competition, and it pervades your life. Eighty percent of seats on airplanes are sold by just four airlines. CVS and Walgreens have a virtual lock on the drugstore and pharmacy business. A private equity firm in Brazil controls roughly half of the U.S. beer market. Monsanto is able to dictate when and how farmers plant its seeds. Google and Facebook control nearly 75 percent of the $73 billion market in digital advertising. Most communities have one cable company to choose from, one provider of electricity, one gas company.

Economic power, in fact, is more concentrated than ever: According to a study published earlier this year, half of all publicly traded companies have disappeared over the past four decades. And it’s not just big corporations. While monopolies have grown and grown since the 90’s, small and independent businesses – and startups – have been disappearing as well.

Policymakers often think of small business as the employment engine of the economy. But when it comes to job-creating power, it’s not just the size of the business that matters as much as it’s age. New and young small companies are the primary source of job creation in the American economy. According to Census data, new firms represented 16 percent of all firms in the late 1970s. By 2011, that share had declined to 8 percent. Now its even less.

The fact that we can now connect market concentration with the decline of good jobs in America isn’t shocking, but it is troubling.

In a new post on The Development Set, our friend Ross Baird talks about the ways that market concentration and monopoly power are crushing America’s small towns and rural communities. Big companies are hollowing out farmers, ranchers, and agricultural workers. In a 2016 article, “Big Food Strikes Back,” Michael Pollan highlighted how President Obama won the 2008 Iowa caucuses, in part, on an anti-concentration-in-agriculture message. But the Obama Administration did little to solve the problems, and since 2013  the average family farmer’s income declined by 50%. In 2016, President Trump won Iowa by ten points.

People of color are seeing opportunities quickly dry up. As Brian Feldman outlines, the Great Recession increased concentration among big banks and insurance companies. The small and medium sized ones either didn’t receive bailouts, or had to merge with big ones. The number of black-owned banks have declined 67% since 1985, and only 4% of the black-owned insurance companies that existed in 1985 still remain.

“Mom and pop” businesses and entrepreneurial ventures bring stability and renewed energy to deteriorating neighborhoods, and help revitalize poor inner city, suburban and rural areas. And, studies have found a community’s level of social capital and well-being is positively related to the share of its local economy held by local businesses. Even more striking: median incomes have risen faster in places with more small businesses compared to those dominated by big businesses.