The May jobs report isn't due out until next Friday, but no one is expecting a great month. Filings for unemployment claims have been bouncing above 400,000, which is way too high, and several of the other economic indicators are slowing down. As has been noted many times, any recovery following a massive downturn takes time and is often punctuated by occasional stalls. But Jeffrey Stibel, chairman and CEO of Dun & Bradstreet Credibility Corp., says there's more going on. From Harvard Business Review:
It turns out that the hiring we are seeing is at the extreme ends of the spectrum. To ensure strong profits, corporations are cutting out the middle layers of management -- the middle-class. In their place, they are hiring at the very low end and promoting at the high end. Senior management compensation is up nearly 25% this year ($9M for the average S&P 500 CEO), to levels higher than in pre-recession days, according to executive compensation research firm Equilar.
On the other side, we have job growth coming in at the bottom of the pyramid, mostly minimum wage and temporary positions. Take last month's job creation, for example. Out of the 260,000 jobs created in April, a whopping 60,000 jobs came from one company: McDonald's. There is nothing wrong with flipping burgers for a living, but it will not pull us out of a recession.
Meanwhile, middle-class jobs are declining at an alarming rate. Middle income jobs have been falling rapidly for some time and now represent well less than half of all jobs in the US. New numbers from the Bureau of Labor Statistics suggest that these middle income jobs have been replaced by low-income jobs. This has left 17 million college-educated Americans with jobs well below their educational levels. If the middle-class are filling the jobs available for the less educated, then the poorest Americans will largely be left jobless. The question we need to start asking is not "how do we add jobs to the economy?"; rather, it is "how do we create middle-class jobs to rebuild our economy?"