New Study Confirms Fact that Job Growth Is Taking Place With Low Cost Jobs - You Cannot Rebuild An Economy Without Middle Class Income

How Exactly Will Cutting Taxes on the Rich Help This?

Basic economics, that is the kind practiced by real economists and not the kind invented by economists trying to curry favor with a future Romney administration have recognized for decades than economic activity is demand driven.  This was the basic lesson of Keynes, and it has been reaffirmed and accepted by countless of projects of academic research since then.  Supply side economics, its supposed counterpart has been debunked by actual experience ever since the idea was floated to justify conservative economic policy.

Now a new study confirms that a major barrier to the economic recovery over the past several years has been the “good jobs deficit”, that is not the lack of creation of jobs but the lack of creation of high paying jobs.

While a majority of jobs lost during the downturn were in the middle range of wages, a majority of those added during the recovery have been low paying, according to a new report from the National Employment Law Project.

This is not political spin.  It is real data, the kind that rational people review and make decision based upon.

Lower-wage occupations, with median hourly wages of $7.69 to $13.83, accounted for 21 percent of job losses during the retraction. Since employment started expanding, they have accounted for 58 percent of all job growth.

The occupations with the fastest growth were retail sales (at a median wage of $10.97 an hour) and food preparation workers ($9.04 an hour). Each category has grown by more than 300,000 workers since June 2009.

Now this has both a micro aspect and a macro aspect.  On the micro side, the loss of income can be a severe economic hardship for those who replaced their higher paying job with a lower paying one, or no paying job at all.

I think I’ve been very resilient and resistant and optimistic, up until very recently,” said Ellen Pinney, 56, who was dismissed from a $75,000-a-year job in which she managed procurement and supply for an electronics company in March 2008.

Since then, she has cobbled together a series of temporary jobs in retail and home health care and worked as a part-time receptionist for a beauty salon. She is now working as an unpaid intern for a construction company, putting together bids and business plans for green energy projects, and has moved in with her 86-year-old father in Forked River, N.J.

“I really can’t bear it anymore,” she said, noting that her applications to places like PetSmart and Target had gone unanswered. “From every standpoint — my independence, my sense of purposefulness, my self-esteem, my life planning — this is just not what I was planning.”

At the macro level, the lack of growth of middle income jobs and the replacement of high paying jobs with low paying jobs sharply reduces consumer demand.  This in turn reduces business demand for employment, and the cycle continues, producing lower economic growth.

The policy prescriptions are straight forward, higher government spending to replace lower consumer spending until the economy rights itself, along with government investment in infrastructure, which employs people and makes businesses more productive (think New Orleans flood protection, which created a large number of construction jobs and saved New Orleans businesses from disaster).

But economics is now being held hostage to politics.  So instead of the right policy there will be the right wing policy.  Giving Mr. Romney  and his ilk a multi million dollar tax cut will help how?