September 2012, John Schmitt and Janelle Jones

The decline in the economy’s ability to create good jobs is related to deterioration in the bargaining power of workers, especially those at the middle and the bottom of the pay scale. The restructuring of the U.S. labor market – including the decline in the inflation-adjusted value of the minimum wage, the fall in unionization, privatization, deregulation, pro-corporate trade agreements, a dysfunctional immigration system, and macroeconomic policy that has with few exceptions kept unemployment well above the full employment level – has substantially reduced the bargaining power of U.S. workers, effectively pulling the bottom out of the labor market and increasing the share of bad jobs in the economy.

In this paper, we define a bad job as one that pays less than $37,000 per year (in inflation-adjusted 2010 dollars); lacks employer-provided health insurance; and has no employer-sponsored retirement plan. By our calculations, about 24 percent of U.S. workers were in a bad job in 2010 (the most recently available data). The share of bad jobs in the economy is substantially higher than it was in 1979, when 18 percent of workers were in a bad job by the same definition. The problems we identify here are long-term and largely unrelated to the Great Recession. Most of the increase in bad jobs – to 22 percent in 2007 – occurred before the recession and subsequent weak recovery.

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