New-fashioned economy and old-fashioned wages in New York City

Louis Proyect lnp3 at
Sun Oct 1 18:52:54 MDT 2000

New York Times, Oct. 1, 2000

Low-Wage Jobs Leading Gains in Employment


New York City's rebounding economy has produced a record number of jobs,
but a new study shows that the number of low-wage jobs, those paying less
than $25,000 a year, is growing much faster than the number of middle- or
high-wage jobs.

The study, to be released tomorrow, found that while the city had added
thousands of high-paying Wall Street and Silicon Alley jobs in recent
years, the fastest job growth had been among low-wage service employees,
like restaurant workers, security guards, day care workers and home
attendants for the elderly.

Since 1993, when job growth in New York City began rebounding after the
national recession of 1991- 92, the number of jobs paying less than $25,000
a year has climbed 22 percent, nearly four times as much as jobs paying
$25,000 to $75,000, according to the study. And the number of low-wage jobs
has risen twice as much as jobs paying more than $75,000.

The study, conducted by the Working Group on the New York City Low Wage
Labor Market, a team of economists from government agencies and nonprofit
groups, focuses on some largely overlooked cracks in the city's economic
boom. It notes, for instance, that many jobs created in the last decade do
not pay enough to support a family. It also found that for the city's
low-wage workers, the median wage dropped by 2 percent from 1989 to 1999,
after taking inflation into account.

"Despite the strong pace of private-sector job growth," the study said, "an
alarming number of families in New York City are unable to earn enough to
achieve an acceptable standard of living."

Some economists for New York State criticized the study, saying it was too
harsh and overlooked some gains of recent years.

The study is intended to analyze conditions and recommend ways to improve
the lives of low-wage workers in New York. It says that compared with the
nation as a whole and many other states, the city's job growth has been
concentrated among low-wage workers, and that their earnings have risen
more slowly.

Mark Levitan, the study's chief author and a senior policy analyst with the
Community Service Society of New York, said several factors accounted for
those trends. Over the last five years, he said, about 200,000 people in
New York have left the welfare rolls and entered the labor market. And as
in Los Angeles, the nation's other major gateway, he said, there has been a
huge influx of unskilled immigrants seeking jobs.

"We have a lot of people coming into the labor market with not a lot of
skills," Mr. Levitan said.

In decades past, many unskilled workers moved into manufacturing or
government jobs, which typically pay considerably more than low-end
service-sector jobs. But factory jobs have declined faster in New York than
in the nation as a whole, while the number of government jobs has remained
flat for a decade.

The study found that when measured from 1989, the peak of the city's last
business cycle, growth in low- wage jobs had accounted for virtually all
the city's increase in employment. From 1989 to 1999, the number of
under-$25,000 jobs climbed by 16 percent, to 590,000, the study said.

Suggesting that the city's economy is taking on something of an hourglass
shape, the study found that from 1989 to 1999, the number of jobs paying
$25,000 to $50,000 declined by 4 percent, as did those paying $50,000 to
$75,000. During the same time, there was a tiny increase in the number of
jobs paying more than $75,000 a year, as the job boom at Wall Street's
securities firms was offset in large part by cuts at commercial banks.

The study, based on data from the federal Bureau of Labor Statistics, found
that of the 3.5 million jobs in the city in 1999, 590,000, or about 17
percent, paid less than $25,000 a year and that 1.8 million, or roughly 51
percent, paid $25,000 to $50,000. The study said 463,000 jobs, or 13
percent, paid $50,000 to $75,000, and 641,000, or 18 percent, paid more
than $75,000.

Several New York State officials criticized the study for focusing on the
decade from the 1989 business cycle peak to 1999, another high point. These
officials argued that it was fairer to measure from 1993, when the local
economy began to rebound.

Stephen Kagann, chief economist for Gov. George E. Pataki, said that the
study painted an unjustifiably harsh picture, and that since the turnaround
year of 1993, there had been across-the-board growth in the city's low-,
medium- and high-wage jobs. Low-wage jobs account for 105,000 of the
311,000 jobs created in the city from 1993 to 1999, or 34 percent.

Mr. Kagann acknowledged that median wages for the city's low- wage workers
might have declined over the last decade, as has been the case in much of
the nation, but he said many of those workers moved to higher-paying jobs.
Pointing to the unusual strength in the city's economy over the last year,
he noted that the number of New Yorkers below the official poverty line
fell last year and that wages for low-wage workers had begun rising, after
accounting for inflation.

"New York City is having its strongest growth on record," Mr. Kagann said.
"Employers are very hungry for people. What hungry employers do is they bid
up wages."

Whatever year one measures from, the dishwashers, janitors and other New
Yorkers who earn less than $25,000 say they can barely make ends meet.

William Cotto, a full-time security guard at an office building at Broadway
and 68th Street, said his $7-an- hour pay was so meager that he worked 20
hours a week as a janitor to support his wife and four children.

"It's very hard," said Mr. Cotto, who lives in Harlem. "I barely have any
money in my pocket. If I buy clothes for one kid one week, then I have to
wait for the next week to buy clothes for one of my other kids."

Mr. Cotto, who has no health insurance, said he had fallen deeply into debt
because of a $2,200 dentist's bill for removing a molar.

Andres Pulinario, a Dominican immigrant who works at a meatpacking plant in
the Bronx, acknowledged that his $5.27-an-hour wage was far too little to
support his family. To help pay the $510 rent for his Bronx apartment, he
is forcing his 15-year- old daughter, Escarlin, to work 25 hours a week in
a supermarket.

"Sure, I worry that it will hurt her in school, but what can you do?" said
Mr. Pulinario. "Some months it's difficult trying to pay the rent on time."

Gloria Pye, a 58-year-old Bronx resident who earns $7.19 an hour providing
home care for an Alzheimer's patient, is struggling to repay $3,000 in
missed rent payments. She said she fell behind and was nearly evicted
because of her low wages, the high costs of her prescription drugs for
hypertension and diabetes, and being out of work for several months.

"I'm working 55 hours a week now," she said. "That's the only way I can
make ends meet."

The study offers many recommendations intended to make it easier for
low-wage workers to make ends meet, including extending health insurance to
more uninsured workers and having the government do more to provide
affordable day care and housing for low-wage workers. It also calls for
improving job training for unskilled workers and providing bus service so
workers living in the city can travel to better-paying jobs in the suburbs.
The study also calls for raising the state's minimum wage to $6.75 an hour,
considerably higher than the federal minimum of $5.15.

"This city is always going to have a significant low-wage service sector,"
Mr. Levitan said. "The question is: Is public policy going to provide these
people with a way to make ends meet? We're always going to have people
working in restaurants, caring for the aged, taking care of children and
mopping floors. That's part of the modern urban economy. All we're saying
is: Why can't these people live at a decent level? Why can't they have
health insurance or decent housing?"

A little more than half of those earning less than $25,000 were born
outside the United States, the study found. And more than 17 percent do not
speak English well or do not speak it at all.

Two weeks ago, several nonprofit groups issued a study saying the federal
poverty line, $14,150 for a household of three, did not come close to
supporting a household of three in New York City. The study said a
household of three in the Bronx needed $38,088 to cover a no- frills budget
for housing, food, child care, health care, taxes, transportation and other
basic costs.

In Queens, a basic budget for self- sufficiency would be $46,836 a year,
that study said, and in the southern half of Manhattan, $74,232.

The new study on low-wage workers found a widening gap between rich and
poor workers. From 1989 to 1999, average wages for workers in New York
earning more than $75,000 annually jumped by 65 percent, after inflation is
taken into account, while those earning under $25,000 experienced a 2.2
percent drop. For those in the least-skilled occupations, after- inflation
wages fell by 14 percent.

Those earning at least $75,000 — about 18 percent of the city's work force
— had 85 percent of the total increase in wages and salaries from 1989 to

"Clearly in this type of economy, skills are rewarded," said the chief
economist for the Port Authority of New York and New Jersey, Eugene Spruck.
"Those with the highest skills get the highest rewards. And the unskilled
find that their real incomes are declining."

Calling the low-wage study too harsh, Mr. Spruck pointed out that
employment in the New York region rose faster than in the nation last year
and was at record levels.

Louis Proyect
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