Truesee's Daily Wonder

The recession might be over, but political impact still felt

The Great Recession officially ended in the middle of last year, but its political impact may be felt by President Obama long after the November midterm elections.

Two recent reports highlight the long-term consequences of the recession for Obama and congressional Democrats worried about being blown out of the water in November. 

The first, from the National Employment Law Project (NELP), concludes that higher-paying jobs in construction and financial services lost during the longest recession in the post-World War II era are being replaced by lower-paying jobs in bars, restaurants and department stores. 

Not only is job growth too anemic to make up for the millions of jobs lost, the NELP report shows it has been particularly weak in creating high-paying jobs.

Net job growth in 2010 has been driven disproportionately by industries with median wages below $15 an hour. More than 50 percent of the growth in employment through July 2010 came from jobs paying a median wage of between $10.83 and $15 per hour, the second-lowest quintile of wages considered in the report. Another 25 percent of the employment growth has been in the lowest wage quintile of $8.92 per hour to $10.82 per hour.

Jobs paying between $22.13 per hour and $31.02 per hour, in contrast, made up 0.2 percent of employment growth in that period.

The study also highlights the number of high-paying jobs lost in the recession. Using statistics from the Bureau of Labor Statistics, it found that 1.2 million jobs paying between $22.13 per hour and $31.02 per hour were lost in the recession. Only about 1,000 of those jobs were added back to the economy in the first seven months of the year.

Six industries actually lost jobs even as the rest of the economy took small steps toward a recovery in 2010. Those industries were construction, finance and insurance, information, real estate and rental and leasing, professional and technical services and utilities.

Construction, which has been hammered by the housing crisis, offered the most dramatic change. That sector lost nearly 1.8 million jobs between December 2007 and December 2009. It lost another 123,000 jobs in the first seven months of 2010. Construction did add 19,000 jobs in August, after NELP concluded its report.

“More so than in past recessions, there’s a sense that more of those jobs are permanently lost, or lost for a long time,” said Chris Owens, NELP’s executive director.

It’s not unusual for lower-paying jobs to come back first in a recovery, Moody’s Analytics Chief Economist Mark Zandi said in an e-mail. Still, he suggested there’s some reason for concern given the unusual number of highly educated and skilled workers who lost their jobs during the recession.

Zandi expects overall payroll employment to fall by 110,000 in September’s report, to be issued next Friday. That would include the loss of 185,000 temporary Census jobs. Next week’s report will  be the final new unemployment report before Election Day.

The top three occupations that have seen job growth, NELP estimated, were retail salesmen, cashiers and food-preparation workers, “a sobering figure given their poverty-level wages.”

Owens said that if the pattern of weak job growth continues, there could be an increase in the number of “working poor.”

The second report, from the Census Bureau, notes that poverty is on the rise. The study found that the nation’s poverty rate climbed to 14.3 percent from 13.2 percent in 2009. That’s an increase of nearly 4 million people.

Since the recession began in 2007, Census estimated, the number of people in poverty increased by 6.3 million. That was a larger rise than what followed the recession of 1973 to 1975, but lower than the recession of the early 1980s.

The Census calculates poverty using thresholds updated annually for inflation via the Consumer Price Index. A couple with two children were considered to be in poverty in 2009 if their annual total income was below $21,756, a lower threshold than the one used in 2008, before the recession peaked.

President Obama on Monday faced tough questions from voters at a town hall on the economy and jobs.

One audience member who said she had voted for the president in 2008 expressed her disillusion, adding that she had grown tired of defending him. Another questioner asked Obama whether the American Dream was dead.

Obama answered that the American Dream remains alive, but the disturbing data on the jobs front, which is the main reason Democrats may lose the House and Senate this fall, shows there is some reason to doubt where the president was right.

It will be difficult to keep poverty from increasing further without the creation of new jobs that pay higher wages, something both parties may need to worry about.

Swanson is the news editor at The Hill.