America’s Underemployment Problem | Business and Economics
New York City, USA – Makalah Monroe works at Outback Steakhouse in Laurel, Maryland. She is a student and the only one in her household with a car. By any account, Monroe has a full line of responsibilities that she works hard to keep up with. She is working full time but still struggling to get by.
“I often leave an eight-hour shift with only about $60 in hand,” Monroe told Al Jazeera.
With credit card, phone and insurance bills piling up, her current salary just isn’t cutting it for her. Often, she has to decide who gets paid and what has to wait.
“Usually I have to call the car and insurance companies and tell them I have to pay late or stop payments altogether,” she said.
Monroe is like millions of Americans whose financial situation depends on the outcome of the US presidential election. President Joe Biden is expected to focus on a number of economic gains in his first term, including higher job growth, low unemployment and falling gas prices, among key economic indicators another that has made it obvious that the US economy continues to grow.
But the current president, his Republican opponents, third-party candidates and longtime Democratic opponents of Biden are against the very poor employment in the United States.
But, with economic growth booming, the question is: Do Americans like Monroe have a better chance for social mobility under the eventual Democratic nominee – most likely Biden – or the most likely Republican candidate, former Pres. Donald Trump?
According to data compiled by the Economic Policy Institute, unemployment is just below 7 percent – the lowest level since the organization began tracking the data in 1990. When Trump left the post, underemployment was over 14 percent. After a peak in March 2021, there has been a steady decline since then.
“Since we recovered from the COVID-19 pandemic, unemployment has declined very steeply and quickly,” said Lonnie Golden, professor of economics and human resources at Pennsylvania State University.
Rising cost of living
Although the Biden administration saw the highest increase in jobs, it is not clear that these new jobs are stable, well-paying jobs that meet the cost of living across the US.
“In the past year, we’ve seen an increase in the way the Bureau of Labor Statistics measures the number of people who work part-time but would rather work full-time hours,” Golden said.
“These numbers are a form of hiding the amount of unemployment for people because they are looking for a second job for more income,” she said.
Despite the economic gains, child poverty is up 137 percent, and average rental prices have risen nationally.
According to a new report out of Zillow, the percentage of income needed to rent a median-priced apartment in the US has jumped 40 percent since the start of the COVID-19 pandemic.
In some cities, it is even higher.
In Miami, Florida, renters must spend 43 percent of their median income to afford a median-priced rental apartment. The minimum wage in Miami is $12 an hour.
Nationally, the purchasing power of the minimum wage peaked in 1968 and has not kept up with the cost of living since.
According to a report by the Federal Reserve Bank of New York, the number of unemployed is much higher – 33 percent among college graduates. That’s because its metric considers graduates working jobs that don’t require a college degree.
Amid the recovery, many of the steady job gains were in the leisure and hospitality sector – an industry notorious for low wages.
“The growing pool of low wages is the American workforce,” Saru Jayaraman, founder of One Fair Wage, told Al Jazeera.
Jayaraman says Biden, who is historically more pro-labor than his Republican opponents, could do much better strategically if he fully embraces pay issues.
“It’s getting harder and harder to tell workers to vote for a Democrat who will raise wages when that won’t happen,” Jayaraman said.
However, in the last election cycle, Biden continued with many of his promises.
One of Mr. Biden’s first actions as president was to raise wages across the board through the Wages Increase Act. But that did not pass because the bill was blocked by Republicans. Biden, however, was able to raise the minimum wage for all federal contractors. The US government is the nation’s largest employer.
Biden has not been involved in eliminating the subminimum wage that allows tipped workers to make wages of just $2.13 an hour – although many states require wage amounts just above height for salaried employees. The rest is supposed to be made up in tips—a move widely accepted in the food service industry and other domestic industries.
The Trump administration, however, actively sought to limit frozen wages for these same restaurant workers. The former president pushed business owners to take control of tips and pass them on to employees as they see fit.
Among the proposed solutions to the lack of work are a number of pressure proposals, one of which is the non-profit One Fair Wage campaign to eliminate the minimum wage nationally.
One Fair Wage’s efforts have helped get wage measures on the ballot across the country, garnering more votes than either presidential candidate.
“In 2020, more people voted for a $15 minimum wage in Florida than [the number of votes for] either Trump or Biden,” Jayaraman said.
Faults in the proposed solutions
One proposed solution is Universal Basic Income. Americans got a taste of that in the early days of the COVID-19 pandemic when the government released one-time payments. That boosted the economy. Consumer spending went up.
In May 2020, personal expenditure rose by 8.2 per cent from the previous month. The second round of government payments had a similar effect. Consumer spending rose more than 4 percent in the months after the second release, which was in early 2021.
However, that was one of the many reasons why inflation rose in the years that followed.
Printing more money means that the individual dollar is less valuable than it once was, driving up prices. But wages did not grow nearly fast enough.
“Just a few years ago, one in three full-time working Americans used to live in poverty. We are closer to one in two,” Jayaraman said.
The Department of Labor for its part is taking steps to address major changes in the economic makeup of the US. In September, the department announced a $57 million grant to expand job training programs, including large population centers like New York, California, Illinois and Ohio.
This decision aims to help those who are underemployed pivot into industries with high demand and expansion related to dealing with climate change and workers up US infrastructure projects.
Although the program is expected to have wide-ranging effects, the Department of Labor says it will help approximately 10,000 workers.
It also joins a wave of unionization efforts across large businesses such as Amazon to even small independent coffee shops. Several companies and traders have successfully lobbied for higher wages and fairer contracts.
That, however, came from empowered workers in individual departments rather than broad policies from Washington.
The Biden administration has been largely supportive of unions that have called for fairer contracts such as the United Auto Workers, for example.
The movement, however, is slow. Salary increases are often gradual over a number of years. The required wage increases for federal contractors were implemented unilaterally by executive order in April 2021 – three months into the Biden presidency. It came true a few weeks ago.
But as Washington considers several possible solutions, people like Monroe still have rent and electricity bills.
“I’m basically living paycheck to paycheck right now,” Monroe said.