As much as commentators are trying to put a happy face on recent data releases showing that job losses are slowing, it still means that fewer people are working. Moreover, one element of the poor jobs environment that it not getting enough play is the way wages are deteriorating. Some who have full-time work have been asked to take pay cuts to preserve jobs; those who work part time are seeing their hours cut.
A sign of how difficult things are for some: food stamps users are increasingly employed. From the Financial Times:
The number of working Americans turning to free government food stamps has surged as their hours and wages erode…
While the increase in take-up is often attributed to the sharp rise in unemployment – which on Friday hit 9.7 per cent – the Financial Times has learnt that some 40 per cent of the families now on food stamps have “earned income”, up from 25 per cent two years ago.
The agriculture department, which runs the programme, attributes this rise to workers having their hours cut back.
“I’m sort of stunned, it seems like a dire warning . . . that even the jobs people are retaining in this recession aren’t at the wage level and hours level that they need to provide for their families,” said Heidi Shierholz, economist at the Economic Policy Institute….
Less attention has been paid to those still in the workforce, whose incomes are also being squeezed. The average working week is now about 33 hours, the lowest on record, while the number forced to work part-time because they cannot find full-time work has risen more than 50 per cent in the past year to a record 8.8m. Wages and benefits have decelerated.
The food stamp data suggest that “the labour market problems are more significant than you would expect, given just the unemployment rate”, said John Silvia, chief economist at Wells Fargo. “For me it suggests the consumer is not going to rebound or contribute to economic growth for the next year, as the consumer would in a traditional economic recovery.”
Another implication is that when the economy recovers, employers will first return staff whose hours have ben cut back to full time before hiring new staff, so improvements in unemployment will be slow in coming.