US economy

Americans Don’t Want to Return to Lousy Low Wage Jobs


Twenty-three million of these jobs paid under $500 per week prepandemic: That’s $26,000 per year. Not only are the wages low: Many of these jobs offer well below 30 hours of work per week.

For those wondering about the connection between these employment and compensation numbers and the broader partisan debate about unemployment insurance, here’s the rub: When you add normal state unemployment benefits and the federal supplements together, $750 per week from the government is a fairly typical benefit for an unemployed American. (Some states go lower, others higher.) And it is safe to assume that someone getting $750 per week for not working is not eagerly jumping up to go back to work for potentially hundreds of dollars a week less.

The chronic problem we face as we put Covid-19 in the rearview mirror is that the U.S. economy before the pandemic was incredibly dependent on an abundance of low-wage, low-hours jobs. It was a combo that yielded low prices for comfortably middle-class and wealthier customers and low labor costs for bosses, but spectacularly low incomes for tens of millions of others. This dynamic was first brought into stark relief by the discourse about “essential workers” during the worst of the pandemic. Now it will be highlighted by the frustrating, unequal outcomes of this Great Reopening.

If, in this summer interim, the remaining federal benefits for those without jobs pressures some employers to increase wages and offer a more full-time hours to their employees, then that is all to the good for them and the sturdiness of our economy. The good news for workers is that wages tend to be “sticky” and hard to reverse. Sadly, employers are aware of this too, and many are offering signing bonuses and other perks instead of increasing wages.

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Some progressives may take me to task for admitting that emergency unemployment benefits, which served many so well, are now keeping some people from returning to their lousy, pre-crisis work. But why, as a former Obama administration economist pointed out, fight common sense or parse the data for more complex explanations? Instead, why not absorb the lesson being taught?

It’s pretty simple and one that, normally, progressives fight to have heard: businesses are paying tens of millions of workers too little money relative to the cost of living in this country.

Daniel Alpert (@danielalpert) is a senior fellow in macroeconomics and finance and an adjunct professor at Cornell Law School. He is the founding managing partner of Westwood Capital and the author of “The Age of Oversupply: Overcoming the Greatest Challenge to the Global Economy.”

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