Job Creation Throughout the Country Centers on Low-Paying Jobs

Job Creation Throughout the Country Centers on Low-Paying Jobs

The latest news on job creation throughout the country saw an increase of 169,000 jobs in the month of August and 168,000 more during September, which is good news, or so it would seem. A majority of the jobs that were created are from low-paying sectors such as retail, hotels, food services and drinking establishments for a total of 44,000 jobs. Compare this to the 23,000 jobs created in the professional and business services, and it’s obvious that employment growth and economic development continue to focus on the low-paying industries.

On the surface, it would seem that any job creation is good for the overall economic development plans at all levels, but reality is quite different. Take into consideration that the ratio of low-paying jobs to high-paying ones is almost 2 to 1. More people are making wages that barely pay enough to cover the bills than those who are working at making a comfortable living. This type of income inequality means that more people are going to slip into the poverty level, and will be unable to purchase goods that help support manufacturing and retail jobs and the overall economy improve. The lack of buying power among a large section of the population directly translates into a slowdown of the overall economy due to lower demand for goods beyond the barest of essentials.

The once highly touted trickle-down economic theory has largely changed due to the fact that the wealthy do not spend nearly as much as expected.  Those with higher paying jobs simply are not putting as much of their money into the economy, as a percentage based upon income as previously in order to make up the difference.  More of their money goes into investments, but as well, in the current economy, there are just fewer Americans who earn enough to be considered “wealthy.”

Are you in California and considering a business improvement district plan or a new economic development plan to strengthen your local economy? Contact Vision Economics today about creating a targeted and focused plan for your area.

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