Insights Blog

Where are the Good Jobs?

April 3, 2015

SCEPA Economist Rick McGahey today published an opinion piece on CNN.com, "Where are the Good Jobs?" McGahey explains why the recent job growth has not led to wage growth.

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The "weak wage growth puzzles economists. After all, as the labor market improves, workers should be able to get raises as employers compete for a tighter labor force."

McGahey lists four reasons for the suppressed wage growth:

  1. People are still out of work. In March labor force participation was 62.7%, the U.S. hasn't experienced a labor force participation this low since 1978.
  2. Job growth is too slow. It took 6 ½ to regain the jobs lost in the Great Recession.
  3. The jobs created pay worse that the jobs lost during the Great Recession.
  4. The suppressed wage growth is due to the long-term failure to share productivity gains between workers and businesses.

McGahey recommends that 'we won't see higher wages without two important policy changes: more government stimulus to create jobs, and changes in labor market rules to rebalance power between business and workers.'