But we also care about the quality of jobs, which raises the question: What’s a good job?
The problem facing the current U.S. labor market is not job quantity. It’s job quality. Over this record-length expansion, U.S. employers have created over 20 million private-sector jobs at a pace of 1.7 percent per year (providing another reminder that the myth of job-killing robots is just that). Historically, that’s a healthy rate, and with unemployment at a 50-year low of 3.5 percent, if all we cared about was the number of jobs, we’d have little to complain about, at least at the aggregate level. (There are, of course, places where job gains have been much less impressive).
But we also care about the quality of jobs, which raises the question: What’s a good job? Thankfully, a new Gallup survey provides a uniquely deep dive into that question. Before we ourselves dive into the details, let’s get two top-line observations out of the way. First, wages matter, but they are far from the only thing that matters. Second, even in today’s strong job market, a minority of Americans — 40 percent — report having good jobs.
The study defines good jobs along a variety of dimensions beyond compensation (pay and benefits), including whether pay and hours of work are stable and predictable. Control over hours and scheduling is also important. There are too many workers who can’t leave their workplace, even to care for a sick child, without being docked pay or worse. Having a sense of purpose at work, career advancement opportunities and having the power to change things that aren’t working for you round off the definition.
Based on about 6,600 workers’ subjective responses along these lines, 40 percent had good jobs, 44 percent had mediocre jobs and 16 percent had bad jobs. These shares varied in ways that are both predictable and surprising. Among the lowest income workers, 30 percent had bad jobs, compared to only 4 percent at the top of the income scale. About twice the share of African American workers had bad jobs compared to white workers (25 percent vs. 13 percent), and black women are particularly likely to hold bad jobs (31 percent).
But the gradient of job quality by education is less steep than you might expect. Among graduates of four-year colleges, 42 percent had good jobs, compared to 40 percent for high school grads. One sobering finding is that the worst outcome for job quality by education is for workers who started but didn’t finish college. Presumably, these are people who are stuck with college debt but don’t get the earning power bestowed by a college degree.
Unsurprisingly, workers differ little in terms of what they value at work. Where they differ, by income level, is whether they their jobs actually give them that. For example, it’s important to about 90 percent of low- and high-income workers alike that their pay is stable and predictable. After all, our bills — rent/mortgage payments, gas, child care, college tuition — are, like it or not, generally stable and predictable. But while 90 percent of high-income workers are satisfied with the predictability of their pay, only 56 percent of low-income workers share that sense of satisfaction.
This is a critical insight that we usually miss in the way most of us look at wage trends. That is, we applaud, for good reason, increases in pay, but we pay too little attention to wage levels. No question, a positive trend moves a low-wage worker in the right direction, but data just out from the Bureau of Labor Statistics provides an excellent example of what I’m talking about.
Thanks to the tight job market, employers have had to bid pay up to get and keep the workers they need to meet the strong macroeconomic demand — and this dynamic is especially evident for low-wage workers. Their weekly pay, inflation adjusted, is up a whopping 5 percent over the past year. Woohoo!
But if we look not at their trend but at their levels, we find that this low-paid, full-time worker still only earns around $24,000 per year. Refundable tax credits, like the Earned Income Tax Credit, can add close to $3,000 to that income (assuming a single parent with one kid), which helps a lot, but in virtually any city across the U.S., trying to get by on that salary is a recipe for persistent stress. Not woohoo.
So, no question, higher pay is necessary to improve not just the quality of jobs, but the quality of life, for those in the bottom half of the pay scale. But, again, it’s the non-wage factors that make the Gallup report so interesting.
According to Gallup’s chief economist, Jonathan Rothwell, even more predictive of job quality than income or benefits is the extent of engagement someone has in the workplace. Workers care a great deal whether their opinions are taken seriously, whether their development is encouraged, whether they have a chance to learn new skills that might lead to upward mobility. Conversely, being stuck in a repetitive, uncreative position erodes job quality.
OK, but aren’t some jobs just inevitably lousy? Yes, in terms of some of the quality killers just noted, but it’s a total cop-out — not to mention inefficient — for employers to throw their hands up in despair. Benefits such as health and child care are too rare in low-wage jobs, and they make a bad job better. Same with a sense of control over scheduling. And creative employers find ways to engage their workers by, for example, seeking their input on issues of satisfaction, safety, customer service, scheduling and production processes.
In fact, other compelling research finds, again unsurprisingly, that an engaged worker is a more productive worker: “Employee engagement consistently affects key performance outcomes, regardless of the organization’s industry or company.”
Bottom line, job quantity — enough jobs for all those seeking work — is essential, but it isn’t the whole story. It’s necessary, but insufficient to achieve fair outcomes that uplift not just people’s living standards but also their spirits. So, the next time you hear some policymaker bragging about jobs, jobs, jobs, remember to ask her: What kind of jobs are we talking about?
Jared Bernstein is a Senior Fellow at the Center on Budget and Policy Priorities. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joseph Biden in the Obama Administration. He wrote this for The Washington Post.