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Bad Retail Jobs Lead Recovery

David Callahan

Today's jobs report shows that the economy continues to slowly improve. After getting run down by a truck driven by Wall Street bankers in 2008, the economy has — over the past four years — emerged from intensive care, left the critical condition list, and is slogging steadily forward through a grueling rehabilitation. 

Anyone who says that this patient would have, could have, or should have gotten back to its normal self by now — if only we had different political leadership — is just wrong. The devastating effects of the 2008 financial crisis will yet remain with us for some time to come. 

Still, that's no reason to be complacent about a terrible economy. We need to be looking for ways to do better for workers, and one obvious place to focus is on improving the jobs that are being created during this fragile recovery. 

The retail sector is a good place to start. That sector led the economy in job growth last month, according to the Labor Department, with 53,000 new jobs -- on top of some 90,000 retail jobs created in the previous two months. Put another way, nearly a third of all people who got jobs last month, got them in a store. And more similar job growth is on the way: retail will be the second largest source of new jobs in the United States in the coming decade. 

The catch, though, is that these jobs generally stink. As Demos notes in a recent report on retail, the typical retail sales person earns just $21,000 per year. Cashiers earn even less, bringing home an annual income of just $18,500. Many retail workers live in poverty or near poverty, relying on public assistance programs and the EITC to get by — which is to say that taxpayers are basically subsidizing the low-wage business model of places like Wal-Mart.

And the low pay is only half the story: Retail employers also have led the way in pioneering just-in-time scheduling of workers, a practice that is good for their bottom line but terrible for any employee with family obligations — as Demos noted in 2010 report. Moreover, most retailers don't provide many benefits such as health insurance or a 401(k). 

All of which is to say that growth itself is increasingly not much of a solution to a weak economy, when so many new jobs are like those in retail. During the Bush years, the unemployment rate sank below 5 percent — but most of the new jobs created during that period were lousy, so household incomes didn't rise and many families ran up mountains of debt as they borrowed to make ends meet.

Looking ahead, finding a way to raise the quality of retail and other low-end service jobs is imperative. The Demos report shows that major retailers could pay workers more, say $25,000 a year, without consumers taking much of a hit. The benefits of higher pay would include not just a reduction in poverty and less use of tax-payer financed assistance programs, but more consumer spending by employees — much of which would end up back in the pocket of the retail sector. Not a bad outcome. 

How could such a rise in living standards happen? Ideally, retailers would act voluntarily with their enlightened self-interest in mind, much as Henry Ford raised the pay of his auto workers so they could afford the cars they were building. But stronger union activity and labor regulations may obviously be needed, and the protests and strikes aimed at Wal-Mart last month on Black Friday may be a portent of things to come -- along with the minimum wage hikes that have passed in a number of states by ballot initiative in recent years. 

Workers and voters understand that we can't build a good economy on bad jobs. Now it's time for retailers to grasp that point, too.