It looks like the zombie of the Great Recession may finally be slain, thanks to the best year for U.S. job growth since 1999. That’s right — 1999! That was back when the United States was in a bona fide economic boom during the Clinton years. According to CNN, the end of 2014 saw unemployment drop to 5.6 percent and analysts predict that 2015 will be just as good, if not better, at adding jobs. But, is it time to break out the bubbly just yet?
Critics are worried that, even with the resurgence of jobs, too many Americans are not seeing an increase in real wages. Cost of living is rising faster than our pay. Businessweek reports that most U.S. workers saw their real wages decline during the first half of 2014. While the post-Recession gloom lingered, it was easy to focus on job creation as the primary objective.
But now that the jobs are back, we must confront the troublesome reality that most workers are being underpaid. Are policy trends fighting or exacerbating this problem? Worryingly, it appears that some noble policy goals and societal trends are actually in danger of increasing the decline of real wages.
The advancement of digital and mobile technology increases the likelihood that more workers will be pushed into freelance, temporary, and part-time work. As explained by Susan Adams in Forbes, sites like Uber, Lyft, Task Rabbit, and Elance are rapidly increasing the percentage of Americans who receive at least part of their income from freelance jobs. These jobs are less likely than full-time jobs to provide any sort of benefits or cost-of-living adjustments.
Faster mobile technology and improved digital media allows for more work to be done remotely, meaning via freelancers. No longer are workers as bound to an office…or a single employer. Using laptops, tablets, and even smartphones, tech-savvy young people can work from anywhere, for anyone. While this may benefit a few, many will likely suffer in the long run as they juggle numerous short-term jobs and see pay driven down by a continual influx of other freelancers.
College students, and even high school students, can drive down freelance pay by offering their service for super-low rates due to parental subsidies. The college kid who is still funded by his or her parents can perform various tasks for minimum wage…or less. The college graduate who is an independent adult may be able to offer higher quality freelance work, but must demand a living wage. Who will the employer choose for a one-off job?
The massive proliferation of college education exacerbates this trend. While it is admirable that the United States is trying to increase access to higher education, many argue that we now produce too many college graduates, explains PBS, leading to a rapid rise in unemployment and underemployment among the well-educated. As college graduates flood the market, the wages commanded by college graduates will continue to fall. Employers who once had to pay more for a better-trained, better-educated worker can now get these workers for much less money.
President Obama’s new proposal to provide free community college for all students, though noble in aim, may have the long-term effect of further eroding real wages as the number of college graduates soars. These graduates, funded by taxpayer dollars, will themselves see their tax burden increase, further eating away at their disposable income.
