What can we learn from labor market shifts?

01 Mar 2017 2:24 PM | Mike Lillich (Administrator)

By Oren Levin-Waldman


First published online by the Yonkers Tribune.


Dr. Oren M. Levin-Waldman, Ph.D.

Dr. Oren M. Levin-Waldman, Ph.D.

I

t would be convenient to dismiss states like New YorkNew Jersey‘ and Connecticutthat have raised their own minimum wages in recent years as simply blue states. After all states with Democratic governors, except New Jersey, and Democratic legislatures are no doubt more likely to raise minimum wages than Republican controlled red states. Moreover, states in the tristate area are high cost of living states, which almost makes increases in the minimum wage an absolute necessity.


Although living costs should be a factor, the real question is what other variables might also drive the need for a non-market intervention. In other words, to discuss wage floors as a necessity in an environment of stagnant wages is to recognize that the market place, or the changing demographics of the labor market, have forced down wages that all that is left at the moment is a legislative solution.


Let’s consider the following: Between 2000 and 2015, according to data from the Current Population Survey (CPS) Professional and Technical occupations increased by 9.7 percent in New York and by 22.8 percent in Connecticut, but decreased by 9.8 percent in New Jersey. In all other states Professional and Technical rose by 24.2 percent. During this time the median hourly wage was approximately $26.44 in 2015 dollars in 2000 and was $26.44 in real dollars in 2015.


Of course minimum wages, unless we are talking about wage contour effects, won’t really have much impact on those in Professional and Technical Occupations. The real changes appear to be among craftsmen, operatives, and laborers: so-called blue collar occupations. Those working as craftsmen decreased by 19.8 and 34 percent in New York and New Jersey respectively, between 2000 and 2015. In Connecticut there was a 3.5 percent increase, while there was a 16.3 percent decrease in all other states.


Those working as operatives decreased by 28.9, 8.7, and 38.9 percent in New York, New Jersey, and Connecticut respectively. In all other states, the decrease was only 11 percent. And those working as laborers decreased by 13.9 percent and 3.4 percent in New York and Connecticut respectively. There was no decrease between 2000 and 2015 in New Jersey.


The median wage for craftsmen in 2000 was $14.18 an hour in real terms and $19.23 an hour in 2015. When adjusted for inflation, craftsmen were earning $19.52 an hour in 2000. The median wage for operatives was $10.58 an hour in real terms in 2000 and $15.38 an hour in 2015. When adjusted for inflation, the operative was earning $14.56 an hour in 2000. So while the craftsmen’s hourly wage fell sightly, it rose a bit for the operative, but not by much. The laborer, however was earning $8.46 an hour in real terms in 2000 and $12.02 an hour in 2015. The laborer, however, was actually earning $11.64 an hour in 2015 dollars in 2000, meaning that the laborer too received a sight pay increase.


We can already see the decline in what might be considered skilled or semi-skilled jobs, but wages have all but stagnated. It is in the services that we have seen increases. In service private household services, there was an increase of 12.5 and 71.4 percent respectively in Connecticut and New Jersey respectively, but a 9 percent decrease in New York. In all other states, there was also a 71.4 percent increase. Among service workers, non-private household, there was an increase by 10.0, 9.7, 30.4 and 6.6 percent in New York, New Jersey, Connecticut and all other states respectively.


Service workers in private households earned $4.81 an hour in real terms in 2000 and $9.62 an hour in 2015. These workers were earning $6.62 an hour in 2015 dollars in 2000. Service workers in non-private household were earning $8.00 an hour in real terms in 2000 and $12.02 in 2015. These workers were earning $11.01 an hour in 2015 dollars in 2000. Workers who then can be said to have seen their wages rise were service workers: 45.3 percent for those in private household and 9.2 percent in non-private household.


On the industry side, particularly in New York, there have been steep declines in manufacturing and increases in Entertainment and Recreation Services. Those working in manufacturing decreased by 58.4, 32.2, 45.7 and 30.9 percent in New York, New Jersey, and Connecticut, and all other states respectively during this period. Those working in Entertainment and Recreation Services decreased by 8.3 percent in Connecticut and by 4.5 percent in New Jersey. In New York, however, there was a 65.2 percent increase and an 18.2 percent increase in all other states among those working in this industry.

Manufacturing workers earned $14.42 an hour nationally in real terms in 2000 and $20.68 an hour in 2015. Manufacturing workers were earning $19.85 an hour in 2015 dollars in 2000, which means their wages only rose by 4.2 percent amidst steep declines in manufacturing jobs. Those in Entertainment and Recreation Services were earning $12.12 in real terms in 2000 and $16.82 in 2015. When adjusted for inflation, these workers were earning $16.54 an hour in 2000.


Objectively speaking, wages across the board, for the exception of certain types of service jobs, have been stagnant. But it is also clear that there has been a decrease in higher paying jobs, especially for those lacking in skills. At the same time, there has been a significant decrease in union membership. On the basis of the CPS sample from 2000-2015, union membership was only 3.2 percent in 2000 and 1.8 percent in 2015. It was 6.0 percent in New York in 2000 and 3.6 percent in 2015. In all other states union membership declined by 10.5 percent between 2000 and 2015, but by 18.2 percent in New York.


Unionized workers are accustomed to being paid more. In New York, the median union wage was $16.45 in real terms, which was $22.64 in 2015 dollars. The median wage for non union members in New York was $14.73 in real terms, which was $19.72 in 2015 dollars, a difference of 14.8 percent. In 2015, however, the median union wage of $21.35 in New York was actually lower than the median non-union wage of $21.64. This might be because of the growth of jobs requiring more skills in sectors that were never traditionally unionized.


Nationally, however, there was still a difference, or what we might call a union premium. The median wage in the U.S. in 2000 was $17.00 an hour, which was $23.40 in 2015 while the median non-union wage was $13.26 an hour, which was $18.25 in 2015 dollars, a difference of 37.6 percent. In 2015, the median union wage was $25.00 an hour while the median non-union wage was $19.23 an hour, a difference of 30 percent.


Although blue states may be more likely to pass wage floors and have laws that make unionizing efforts easier, it should become clear that in the tristate area, at least, there is a need for labor market institutions like unions and minimum wages simply by the sheer force of the labor market shifts that have been occurring. Unions clearly make a difference, and where unionism is in decline, then legislated wage floors are essential to bolster the wages of workers.

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