Low-Pay Sectors Dominate U.S. and State Job Growth
In California, industries that are hiring pay 40% less than those that are shrinking, a study finds.
By Nancy Cleeland
Times Staff Writer

January 22, 2004

California is being hit hard by a recent nationwide shift of jobs from high-paying industries to lower-paying sectors such as retail sales and tourism, a trend that doesn't bode well for the economy, according to a report released Wednesday.

The report by the Washington-based Economic Policy Institute paints a picture of a state and national economy in which employment growth is being driven largely by low-skilled service jobs.

In Los Angeles, according to the preliminary results of another study, the shift is particularly pronounced because so many new jobs are in the "underground" cash economy of laborers who aren't counted in government statistics. These very low-wage workers — people who do yardwork or clean houses or wash dishes — might account for as much as 15% of all jobs in the metropolitan area, said Dan Flaming of the Economic Round Table, which is conducting its study for the city.

"It's really scary," Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said of the long-term implications. An economy increasingly dependent on lower-wage jobs will have a smaller tax base and see less consumer spending, checking economic growth and reducing the quality of public services and infrastructure, Kyser said.

Statewide, since the national recession officially ended in November 2001, the jobs that have been created are in industries that pay an average of 40% less than do those in which jobs have disappeared, the Economic Policy Institute said.

The institute describes itself as focusing on "the economic condition of low- and middle-income Americans and their families" and has been critical of the Bush administration's depiction of the economy.

By the institute's measure, only three other states — Delaware, Massachusetts and Wyoming — fared as badly or worse than California. Only two states, Nevada and Nebraska, saw wages in industries with job growth exceeding wages in sectors with job losses.

"We're losing important manufacturing jobs that have been available to support families, and gaining jobs that don't provide that opportunity," said Jeff Chapman, an economic analyst with the institute. "Now we see that the trend is worsening, even in the middle of a recovery."