Are the new jobs good jobs? Well, we're not sure…

May 25, 2011 — In the last several months, the U.S. economy has added several hundred thousand jobs, sparking optimism among some observers that the labor market has finally started to recover in earnest. There is substantial debate, however, over whether the jobs being added are “good jobs” — those that pay a high-wage and offer job security and benefits to workers — or “bad jobs,” which don’t. There is some, mostly anecdotal, data suggesting that the jobs being created in certain industries pay less than the pre-recession jobs, but, oddly, the federal government simply does not collect sufficiently robust information to determine how the wages and benefits of new hires differ from the wages of existing employees in the same occupation.

That basic lack of data has perplexed some labor economists and policy advocates, who see such information as a crucial part of understanding the current labor market. It is true that the information would not be definitive: the existence of a newly hired employee does not necessarily mean that a new job has been created, because “new hires” would show up regardless of whether the position was actually new (if an employer fires one employee and hires another for the same job — a process known as “churn” — the new employee is a new hire, but the job is not new). Nevertheless, being able to track the wages of new hires relative to existing workers would be a valuable contribution to an understanding of the pressures facing workers and the state of the labor market as a whole, several labor economists said.

“The difference in wages is an essential part of measuring our recovery,” said Mark Price, an economist at the Keystone Research Center, a Pennsylvania think tank that does research on the labor market. “More generally, if we expect our living standards to rise over time, it’s important that we know whether the new jobs being created are good jobs and whether large groups of new workers are seeing their wages decline. Right now, we don’t have enough data to see what’s going on in a comprehensive way.”

A curious gap

The lack of data on wages and job tenure at the occupational level is particularly striking in the context of the vast amount of data that the federal government does collect through various agencies and bureaus. The principal entity responsible for collecting data on the labor market is the Bureau of Labor Statistics (BLS), which is the information-gathering arm of the Department of Labor. Visitors to the BLS website can quickly become overwhelmed with the vast number of tables, surveys, data sets, and reports that are constantly released by the Bureau. The BLS gathers information on unemployment, inflation, mass layoffs, wages, benefits, demographics and more through a variety of surveys and studies. And in fact, the BLS collects data on occupational earnings in several different surveys, such as the Occupational Employment Survey (OES), a semi-annual survey of approximately 200,000 firms, and the smaller but more detailed National Compensation Survey (NCS), which also includes data on benefits.

A decline in the wages of new hires would likely show up eventually in the overall occupational average that is collected by these surveys, but economists at the BLS said that it could take years before such a drop would be reflected in the average wage across the occupation. Additionally, Price pointed out that if the overall average wage were to decline, there would be no way to tell whether it was declining for all workers — due to union concessions, for example — or if new employees were being hired at a lower wage.

But in order to determine whether wages for newly hired workers are rising or falling relative to existing workers at the occupational level, the BLS would have to collect information about job tenure — that is, the length of time a worker has been at a particular job. If that information were collected, economists said, it would be relatively easy to analyze whether the new jobs being created in specific occupations are paying less than the old or existing jobs.

The manufacturing sector, for example, has recently seen job growth, but — as has been widely noted using anecdotal and firm-specific evidence — many of the new jobs being created in manufacturing pay less than they used to. It is currently very difficult to analyze this phenomenon comprehensively, but if the BLS were to collect information on wages separated by job tenure and occupation, a much clearer picture would emerge both of where wages were falling and whose wages were falling.

“This data would be another piece of evidence to push us in the direction of, first, recognizing that there is a problem with declining wages, and second, of doing something about it,” Price said.

Several economists at the BLS also expressed interest in seeing data on occupational wages and job tenure and, in fact, Secretary of Labor Hilda L. Solis has labeled her vision for the Department “Good Jobs for Everyone.” As part of that vision, one of the Department’s strategies is to, “Produce timely and accurate data on the economic conditions of workers and their families.”

That vision raises an important question: how do you know if the economy is actually producing good jobs for everyone? Remapping Debate made several attempts to ask that question of the Department of Labor, but the Department did not respond.

A host of potential uses

If the data on the wages of new hires existed and were easily accessible, many labor economists said that there were a wide variety of useful applications for it, which could end up influencing policy decisions for the better.

John Schmitt, a senior economist at the Center for Economic and Policy Research, a beltway think tank, agreed. “In the best of all possible worlds our policy decisions would be informed by the data,” he said. “When we don’t have the data, we’re forced to make decisions on incomplete information, which often encourages decisions to be made based on political connections and in backroom deals.”