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FILE - In this Thursday, Jan. 6, 2011, file photo, House Energy and Commerce Chairman Fred Upton, R-Mich., speaks at a House Rules Committee meeting regarding floor debate on legislation that would repeal the health care overhaul bill on Capitol Hill in Washington. (AP Photo/Charles Dharapak)
Wealth gap: Fewer middle-pay jobs for low-wage workers
First Published Mar 12 2014 10:39 am • Last Updated Jun 18 2014 09:02 am

Washington • For years, many Americans followed a simple career path: Land an entry-level job. Accept a modest wage. Gain skills. Leave eventually for a better-paying job.

The workers benefited, and so did lower-wage retailers such as Wal-Mart: When its staffers left for better-paying jobs, they could spend more at its stores. And the U.S. economy gained, too, because more consumer spending fueled growth.

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Not so much anymore. Since the Great Recession began in late 2007, that path has narrowed because many of the next-tier jobs no longer exist. That means more lower-wage workers have to stay put. The resulting bottleneck is helping widen a gap between the richest Americans and everyone else.

"Some people took those jobs because they were the only ones available and haven’t been able to figure out how to move out of that," Bill Simon, CEO of Wal-Mart U.S., acknowledged in an interview with The Associated Press.

If Wal-Mart employees "can go to another company and another job and make more money and develop, they’ll be better," Simon explained. "It’ll be better for the economy. It’ll be better for us as a business, to be quite honest, because they’ll continue to advance in their economic life."

Yet for now, the lower-wage jobs once seen as stepping stones are increasingly being held for longer periods by older, better-educated, more experienced workers.

The trend extends well beyond Wal-Mart, the nation’s largest employer, and is reverberating across the U.S. economy. It’s partly why average inflation-adjusted income has declined 9 percent for the bottom 40 percent of households since 2007, even as incomes for the top 5 percent now slightly exceed where they were when the recession began late that year, according to the Census Bureau.

Research shows that occupations that once helped elevate people from the minimum wage into the middle class have disappeared during the past three recessions dating to 1991.

One such category includes bookkeepers and executive secretaries, with average wages of $16.54 an hour, according to the Labor Department. Since the mid-1980s, the economy has shed these middle-income jobs — a trend that’s become more pronounced with the recoveries that have followed each subsequent recession, according to research by Henry Siu, an economist at the University of British Columbia, and Duke University economist Nir Jaimovich.

That leaves many workers remaining in jobs as cashiers earning an average of $9.79 an hour, or in retail sales at roughly $10.50 — jobs that used to be entry points to higher-paying work. Hourly pay at Wal-Mart averages $8.90, according to the site Glassdoor.com. (Wal-Mart disputes that figure; it says its pay for hourly workers averages $11.83.)


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Since the Great Recession began, the share of U.S workers employed by the retail and restaurant sector has risen from 16.5 percent to 17.1 percent.

"It really has contributed to this widening of inequality," Siu said.

The shift has injected new pressures into the economy. Older and better-educated retail and fast food workers have become more vocal in pressing for raises. Labor unions helped launch protests last year against such employers as Wal-Mart, McDonald’s and Burger King.

Fewer teenagers are staffing cash registers, prepping meals or stocking shelves, according to government data. Replacing them are adults, many of whom are struggling with the burdens of college debt or child rearing. Some are on the verge of what was once envisioned as retirement years.

They are people like Richard Wilson, 27, in Chicago. More than 2½ years ago, a Wal-Mart store manager spotted Wilson cleaning the cafeteria at Liberty University in Lynchburg, Va.

A double major in biblical studies and business communications, Wilson had $3,000 in tuition due and had maxed out on student loans. He said the recruiter suggested that a management job could eventually be within reach for him because, "Wal-Mart is where people’s dreams become a reality."

Wilson first worked at a Wal-Mart near college before returning to his Chicago hometown without a degree but with $50,000 in student debt and another job at a boutique Wal-Mart specializing in groceries.

Today, Wilson earns $9.45 an hour at that Wal-Mart and lives on the city’s western edge with his grandmother. He boards a bus most mornings at 3:30 a.m. and arrives for his 5 a.m. shift in the more upscale neighborhood of Lakeview East. He has applied for promotions. So far, no success.

If he had the money for a ring and a wedding, Wilson said he would propose to his girlfriend.

Last year, 17.4 million Americans between ages 25 and 64 earned less than $10.10 an hour, the minimum wage proposed by President Barack Obama (The current federal minimum is $7.25.) That’s equal to an income of nearly $19,000 for a full-time employee — less than half the median pay of a U.S. worker.

The share of Americans in their prime earning years who earn the equivalent of $10.10 an hour or less, adjusted for inflation, has risen to 13.4 percent from 10.4 percent in 1979, according to government data analyzed by John Schmitt, a senior economist at the progressive Center for Economic and Policy Research.

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